What Cover Should I Consider?
Here are a few classic profiles of clients we meet every day. Do you see yourself in here? Click and find out what we recommend to our clients in these circumstances.
Single person without children
You are working and left home. You don’t have anyone special to care for and you are concentrating on your career. Your income funds your lifestyle and the things you surround yourself with. Your car, your home, your holidays and your investments. You probably don’t have much savings put aside to pay the bills if you are unable to work. If you do suffer an illness or have an accident which stops you working for a long period, your finances will be in jeopardy causing you very quickly to fall back on your family and rely on state benefits.
Greg is a trainee solicitor, he’s 26 and he has just bought his first home and he has a car on finance
His mortgage is £100,000 over 30 years and his car loan is £10,000 over 5 years.
Need
- A lump sum payment to clear his mortgage and car loan if he gets seriously ill
- Continuing source of Income allowing him to maintain his lifestyle and pay the bills if he was unable to work
- A monthly lump sum for 12 months if he lost his job so he could fund his lifestyle while looking for a new position.
Suitable policies
- Critical Illness
- Income Protection
- Unemployment Insurance
Couple without children
Whilst you don’t yet have any financial dependents, you may well be financially reliant on each other. Would lifestyle and mortgage costs be as manageable without both incomes? If the answer to this is no, then it would be a smart idea to protect your monthly incomes after your employer’s salary stopped. If you died or suffered a critical illness it would be smart to ensure you were able to receive a lump sum to pay off or largely pay down the big debts your share.
Gabriel (32) and Tess (28) have just bought their first home.
Gabriel is a engineer on a salary of £35,000 and Tess works in Asset Finance and earns £30,000.
Their mortgage is £200,000 over 30 years on a repayment basis.
Need
- An ongoing income to maintain their lifestyle and pay their bills should either be unable to work due to long term illness or accident
- A lump sum to clear their mortgage if either of them were to die
- A lump sum to clear their mortgage if either of them were to suffer a serious illness
Suitable policy
- Income Protection
- Critical Illness
- Life Assurance
Couple with children
You are conscientious parents and always put your children first. You want them to go to the best schools and onto university. You established savings plans for them but you need to know that you will be able to support them long term, if you suffered an illness which stopped you working or you were to die unexpectedly. Your mortgage is a burden, as are the costs of repaying the loan you needed for the house renovation after you bought it. It is essential that you know that funds would be there in all circumstances.
You have a limited budget which means you will need to prioritise the protection you take out. Perhaps part protection in the areas you have identified would be better than fully funding one or two and forgetting the rest until funds allow. This is the classic dilemma. An insurance expert with a family might be a good person to talk to. All our advisers are parents in the same boat as you.
Chris and Claire are 35 and have 2 small children.
They own their home on which there is a mortgage of £160,000.
Peter earns £50,000 as an accountant and Janice is currently a full time mother.
Need
- A lump sum to pay off the mortgage should either Chris or Claire die
- A lump sum to pay off the mortgage should either Chris or Claire suffer a serious illness
- A replacement income for Chris in the event that he is unable to work due to long term sickness or serious accident
- A replacement income for Chris should he die
Suitable policy
- Life Assurance
- Critical Illness
- Income Protection
- Family Income Benefit
- Wills
Single Parent
As a sole household earner, it is down to you and your ability to continue to earn in order to maintain your mortgage and the lifestyle you want for yourself and your child/children. Loss of income through incapacity or serious illness could have a major impact on this. In the event of your death, who would look after your dependents and would you need some financial provision for this?
Grant is a single dad with a 2 year old son
He currently has a mortgage of £60,000 on the property he is living in.
He works as pharmacist at the local health centre while his boy is in day nursery
Need
- A lump sum payment to pay off the mortgage if he were to die or suffer a long term illness
- An income to pay the bills and provide for his son until he leaves university if grant was not around to support and guide him
- Unemployment protection for 12 months to maintain Grant’s mortgage payments should he be made redundant which would give him enough time to find a new position.
Suitable policy
- Critical Illness
- Life Assurance
- Income Protection
- Income Protection (Accident, Sickness and Unemployment)
Retired Couple
Whilst pension income will not be affected by long term incapacity or serious illness, it could cease or dramatically reduce in the event of one or the others death. If there are still financial commitments like mortgages to be paid this could be a problem on reduced income and even without this, the cost of the regular bills would still need to be met.
Lenard & Eileen are both 68 and retired. They have a small mortgage of £25,000 and both are in receipt of the state pension, although they mainly rely on Fred’s personal pension
Need
- A lump sum to pay off the mortgage should either Lenard or Eileen die. Should budget not stretch to both, Len, as the main earner, would be the priority
- A replacement income should Len die that would allow Josie to maintain her standard of living
- An ongoing income to maintain their lifestyle and pay their bills should either be unable to work due to long term illness or accident
Suitable policy
- Life Assurance
- Income Protection
- Family Income Benefit
Directors & Shareholders in a Small Business
Mark & Matthew are both directors and 50% shareholders of a small café and brasserie. The business is thriving but they are concerned that if either of them were incapacitated for a long while or they were to die unexpectedly, the business would suffer a dramatic loss of profit. They both agree that they should put insurance in place that would provide each partner with sufficient funds to be able to buy the deceased partners shares from his estate and the estate must give the surviving partner first refusal to buy them. In addition, they agree that the company insures itself against a director being off work for an extended period of time which would allow the business to bring in someone of similar capabilities.
Need
- A lump sum life of another policy with a sum assured equal to 50% of the value of the company paid for by Mark as he has an insurable interest - with Matthew as the life assured
- A lump sum life of another policy with a sum assured equal to 50% of the value of the company paid for by Matthew as he has an insurable interest - with Mark as the life assured
- Critical Illness plans for both Mark & Matthew funded out of their salary post tax.
- A cross Option Agreement drawn up between the partners which outlines the terms under which the directors estate must offer the deceased’s share to the surviving partner if either were to die.
- Key man Income Protection plans effected on each of the directors by the company and paid for out of company turnover. The benefit will be for the company to use as it sees fit.
Suitable Policy
- Life assurance for Matthew funded by Mark
- Life Assurance for Mark funded by Matthew
- Critical Illness Assurance for Mark
- Critical Illness Assurance for Matthew
- Key Man Income replacement cover for both Directors funded by the business
- Cross Option Agreement
