Putting Protection Back On The Table
Protecting you and your family is just as important as investing money for the future.
When it comes to exciting fi nancial purchases, life insurance is never going to top the list. Most of us would rather bolster our investment portfolio, look at buying a rental property, or improve our pension provision.
But it is vital if your loved ones depend on your fi nancial support for their livelihood.
Go back in time, and you’ll fi nd life insurance was the mainstay of a fi nancial plan – the fi rst thing you did. But fi gures from the Association of British Insurers suggest that many households no longer see it as a must-have.
They show that only six million households have some form of life or income insurance in place, compared to 19 million that have home contents cover.1
seem to value their TVs, smartphones and vinyl collections over themselves. Which would your family miss most?
For some it is the cost, or perceived cost, of insurance that puts them off. But for those who have it, the cost of a simple term insurance policy may only be a couple of pounds a day – less than the price of a skinny latte from your local coffee shop.
So, while breaking your smartphone is undeniably inconvenient, leaving your partner to struggle with the cost of raising the family, mortgage payments and loans for the price of your daily caffeine fi x could prove a much bigger problem.
Life cover can appear an intimidating topic. So unsurprisingly, many people struggle to understand the difference between life assurance and life insurance. The main difference is that life insurance covers you for a set term, whereas life assurance covers you for your whole life. That’s why life assurance is often known as ‘whole of life’ cover.
You will have probably seen whole of life policies for older people advertised on daytime television or have received mail shots through your letterbox from an insurer selling over-50s plans to cover funeral costs.
But these plans can do much more than simply cover funeral costs. They can pay off a mortgage
1
or other loan. They can protect against the early death of a spouse, partner or parent – particularly important for people with fi nancial responsibility for children. And they can be used to help cover the cost of an Inheritance Tax (IHT) bill.
The decision whether to go for life insurance or life assurance will depend on your individual circumstances and the type of protection you are looking for. Irrespective of which type of policy is right for you, make sure you get cover as young as you can, because it will typically be cheaper.
Trust issues In other words, two-thirds more households
The best way to ensure that the proceeds of a life policy are paid to the people you intend to benefi t is to arrange for the policy to be put in a trust. The most appropriate type of trust is generally one that gives the trustees discretion about how they distribute the benefi ts, but it is a good idea to get advice about this.
If you die, the policy proceeds will be paid to the trustees and then to the benefi ciaries, not into your estate. This arrangement should speed up the payment, but crucially, it avoids the proceeds falling into your estate and worsening an IHT problem.
Life insurance protects your heirs from the unknown and helps them through an otherwise diffi cult time of loss. So, if you’ve got children or other dependants or a mortgage to pay, then make sure you discuss your protection needs with a fi nancial adviser. They can consider every aspect of your situation and fi nd you the right policy.
It could be the most important conversation you ever have.
Please visit my website or contact me to receive a complimentary guide covering Wealth Management, Retirement Planning or Inheritance Tax Planning.
Scott Symes
FPFS, Certs CII (MP & ER) Chartered Financial Planner
01202 951227 07885 899742
scott.symes@
sjpp.co.uk www.scottsymeswm.co.uk
Association of British Insurers, 2018 Please mention The Corfe Mullen Link when responding to adverts 43
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