Protection and Insurance for Individuals and Families

Introduction to Protection Insurance 

Securing your family's finances and peace of mind is fundamentally important in today's uncertain world. Whether you're thinking about your loved ones' future or deciding which income protection policy is best for you, understanding the often confusing world of protection insurance in the UK is the first step.

In this guide, we will explore the various insurance options available, from life insurance to health insurance and critical illness cover. We’ll provide insights into the various protection products that are most suitable for different life stages. Whether you're starting a family, building a career, or enjoying retirement, by understanding the protection options that suit your requirements, you can make well-informed decisions about safeguarding your financial security for now and the future.

Understanding Life Assurance

Life assurance is one of the most important products you can buy to protect your family's finances. It provides a tax-free lump sum payout to your beneficiaries upon your death. It also provides a safety net to maintain your family’s lifestyle by covering everyday expenses, housing costs, and other necessities.

Life assurance can also relieve financial burdens by settling outstanding debts like mortgages or student loans, easing the financial responsibilities of your loved ones. Furthermore, life assurance allows you to meet future financial goals, whether it's funding your children's education or fulfilling their dreams and aspirations.

Life assurance products offer essential benefits that provide peace of mind and financial security. Knowing your family is protected allows you to focus on enjoying life today, confident in the knowledge that they will be looked after and safeguarded against future uncertainties. Life assurance also offers flexibility with various types of policies available to suit your personal needs and budget.

Each type of policy offers distinct advantages to suit different needs and circumstances. Life insurance ‘Term Assurance’ provides affordable coverage for a specific period, making it ideal for young families or those with temporary financial obligations such as a mortgage. Whereas a ‘whole of life’ policy offers lifelong coverage where the cash value can accumulate over time. These options allow individuals to choose the policy that best aligns with their financial priorities and goals.

Considering Life Insurance? Here are some key questions:

• How much life assurance do I need? Financial advisors can help you calculate the appropriate coverage amount based on your income, debts, and family needs. 
• When should I get a life assurance policy? Typically, younger and healthier individuals pay lower premium costs for life insurance policies; however, there isn’t a specific age at which they become more relevant.
• Is life assurance subject to inheritance tax? Proper estate planning strategies can minimise inheritance tax implications. Speak to your wealth management advisor for personalised guidance.

 

Our Milton Keynes wealth management team will conduct a personalised life assurance assessment. We can help you select the right policy type, determine the appropriate coverage amount, and integrate life insurance into your overall financial plan.

Choosing the Right Health Insurance

In the UK, the NHS offers emergency and ongoing medical treatment via local GPs and hospitals. However, waiting lists for procedures or treatments can often mean a lengthy wait. This is where private health insurance can help.
Private health insurance bridges the gap between NHS services and faster access to medical care. A private health plan allows you to choose your consultant and hospital and reduce waiting times for treatment.  This can be particularly appealing if you:

• Value faster access to treatment
• Want more choice
• Require access to specific treatments
• Have a pre-existing medical condition

 

The cost of private health insurance premiums varies depending on several factors, including:

• Your age and health: Generally, younger and healthier individuals pay lower premiums.
• Level of cover: More comprehensive plans with broader coverage will have higher premiums.
• Excess: This is the amount you contribute towards any claim before your insurance pays out. Choosing a higher excess can lower your premium.

 

Need help determining if private health insurance is right for you? Ask yourself these key questions:

• Do I need private health insurance? Consider your health needs, priorities, and how comfortable you are with NHS waiting times.
• What level of cover is right for me? Compare plans from different providers to find one that aligns with your needs and budget.
• What are the exclusions? Before you take out a health insurance policy, be aware of any treatments or procedures not covered by your chosen plan.

Our experienced advisers will assess your individual needs, compare plans from reputable insurance providers, and guide you toward a policy that offers the right balance of coverage and affordability. We can also discuss what excess should apply and whether you should include complementary therapies to help make informed decisions.

Protecting Against Critical Illness

When you're faced with an unexpected illness, the emotional toll is immense, but the financial burden shouldn't add to your stress. Critical illness cover is a financial safety net for these difficult times. This insurance offers a tax-free lump sum payment if you're diagnosed with a critical illness detailed in your policy.

A critical illness policy provides many invaluable benefits for individuals and families:

• Financial Security: The lump sum can help you manage the financial strain of treatment costs, potential loss of income if you cannot work, and additional living expenses during recovery. This could include anything from specialist care to modifying your home for accessibility.
• Peace of Mind: Knowing your finances are protected allows you to focus on your health and getting better. You can concentrate on your recovery without the added worry of financial instability.
• Flexibility: You can use the payout as needed. It can help replace lost income, pay off debt, or provide a financial buffer during a difficult time.

 

Our clients often ask, "Who needs critical illness cover?". We answer that this cover is valuable for anyone concerned about the financial impact of a serious illness. In particular:

Individuals with Dependents: If you have a family relying on your salary, critical illness cover can ensure their financial security if you become ill.
People with Mortgages or Debts: The money can help cover mortgage payments or other outstanding debts, preventing financial hardship during a critical illness.
Those Without Adequate Income Protection: If you don't have an income protection plan, critical illness cover can provide you and your family with much-needed funds.

Essential Questions About Critical Illness Cover:

• What critical illness conditions are covered by my policy? Common illnesses covered include cancer, heart attack, stroke, and others.
• How much critical illness cover do my family need? Your adviser will calculate the required amount based on your specific financial commitments and lifestyle needs.
• Will pre-existing conditions affect my eligibility? Be honest with your insurer about your medical history now and if your circumstances change in the future to ensure your policy remains valid and your premiums are correct.

 

Our wealth management advisers can help you select the most suitable critical illness cover from a range of options.  We can assist you with:

• Plan Comparisons: We'll compare policy options from trusted insurance providers to find one that suits your budget and financial situation.
• Understanding Different Types of Cover: We'll explain the various critical illness cover options available and help you choose the right one for your situation.
• Overall Financial Plan: We can work with you to integrate critical illness cover into your overall financial plan to ensure you're covered for all eventualities.

 

How Does Income Protection Work?

Income protection insurance safeguards your income  if you cannot work due to injury, job loss, or even redundancy. Income protection provides regular monthly payouts to cover your bills and living expenses until you can return to work, retire, or the policy term ends.

The job market can be unpredictable, and redundancy can cause significant financial strain. Income protection offers some security during this time. These plans pay out a pre-determined percentage of your income for a set period after a qualifying period.

Income protection offers a safety net by providing an income if illness, injury, or disability prevents you from working. This type of cover provides our clients with many benefits. We find the most important are:

• Reassurance: Being confident that your expenses are taken care of frees up your attention for more significant concerns.
• Financial stability: Safeguards your finances and prevents debt during difficult periods.
• Assistance for re-entering the workforce: Certain policies provide rehabilitation benefits to assist with your return to employment.

Critical Questions About Income Protection:

• How does income protection insurance work? Income protection insurance provides a monthly benefit when you're unable to work.
• Do I need income protection insurance? Income protection insurance benefits individuals who depend on their salary to meet living costs, particularly those without a lot of savings or living in households with a single income.
• How long does income protection insurance last? Depending on the terms of your policy, income protection insurance can provide coverage until you can return to work, retire, or reach the policy's maximum pay-out age.

 

Income protection isn't a one-size-fits-all solution. A reputable wealth manager can help you assess your individual needs, explore different policy options (accident & sickness only, redundancy only, combined, etc.), and understand the costs involved. They can also compare plans from reliable UK income protection insurers to find the best fit for your financial security strategy.

Insurance for Different Life Stages

Each life stage brings unique financial challenges and responsibilities. Whether you're a young adult starting your career, a family navigating parenthood, or a retiree enjoying more free time, our financial needs evolve to reflect our changing circumstances and priorities. Your financial plan should adapt and grow alongside you. 

Young Adults:

• Life Assurance: While it might seem unnecessary, a life assurance policy can be surprisingly affordable. It offers valuable protection for young families, ensuring your loved ones are financially secure.
• Critical Illness Cover: Consider critical illness cover to safeguard your finances if diagnosed with a severe illness. This lump sum payout can help manage treatment costs or debt.
• Income Protection: Starting a career often means limited savings. Income protection ensures your income stream continues, allowing you to focus without financial worry.

 

Families with Young Children:

• Life Assurance: As your family grows, so does the financial impact if something happens to you. Increase your life assurance coverage to reflect your growing financial commitments, such as a mortgage or childcare costs.
• Child Benefit: The UK government’s Child Benefit offers financial support for families with children under 16 (or 20 if they stay in approved education or training). Consider this benefit when planning your family’s finances. Many of our clients invest this or put it into a junior ISA  to give to their children when they come of age to help with education costs or, for a house deposit, or even to fund a gap year.
• Family Income Benefit: With children depending on you, income becomes even more crucial. This policy is designed to safeguard your income and ensure your family's financial security in the event of a parent or guardian passing away. This policy pays out a death benefit and an income for the remaining term.

 

Empty Nesters Approaching Retirement:

• Mortgage Protection Insurance: If your mortgage isn't paid off yet, consider mortgage protection insurance. This ensures your mortgage payments are covered if you're unable to work due to illness or disability.
• Long-Term Care Insurance:  Planning for potential future care needs is essential. Long-term care insurance helps cover the costs of care homes or assisted living facilities, protecting your retirement savings.
• Estate Planning & Wills : Ensure your assets are distributed according to your wishes with a properly drafted will. Consider creating trusts to protect your inheritance for future generations.

 

Retirement: 

• State Pension: The UK State Pension provides a foundation for your retirement income. However, you might need more than this to maintain your desired lifestyle.
• Private Health Insurance: Consider private health insurance to access faster treatment and potentially avoid lengthy NHS waiting lists.
• Review Existing Coverage: Review your existing life insurance and income protection policies to ensure they remain adequate for your retirement needs.

 

The Benefits of Using a Financial Adviser

Deciding on the right protection and insurance can feel overwhelming.  A trustworthy financial advisor acts as your guide to complex options and recommends the best fit for your needs.  They ensure you have the right safeguards, offering peace of mind and protecting your financial well-being during unexpected events.

Please schedule a consultation today to learn how our financial advice can help you and your family.

Protection and Insurance FAQs

My partner and I are both self-employed. Is income protection even more important for us?

Yes, income protection becomes even more crucial for self-employed individuals. Unlike employee benefits packages, you won't receive statutory sick pay if you're unable to work due to illness or injury. Income protection acts as a safety net, replacing a portion of your income to cover your essential expenses.

I have a pre-existing medical condition. Will I still be eligible for income protection or critical illness cover?

Some pre-existing conditions might affect your eligibility or lead to higher premiums. However, a financial advisor can help you navigate these complexities. Insurers might offer specialised plans or more favourable terms for your specific condition.

Can I get income protection that covers redundancy alongside illness and injury?

Yes, many income protection plans offer combined coverage for redundancy, illness, and disability. This comprehensive protection ensures your income stream continues if you're unable to work due to any of these unforeseen events.

I'm approaching retirement. Should I keep my existing income protection plan or convert it to an alternative option?

As you near retirement, your income protection needs might change. Consider consulting a financial advisor to explore your options. Converting it to a different type of insurance, such as permanent health insurance, that offers benefits tailored explicitly to retirement needs may be more suitable.

How does critical illness cover in the UK differ from income protection insurance, and which is more suitable for my family's financial security needs?
Both critical illness cover and income protection offer financial security, but they address different situations:

• Critical Illness Cover: Provides a financial buffer to manage immediate expenses if a critical illness strikes.
• Income Protection: Offers long-term financial security if illness or injury prevents you from working, ensuring your family's bills and living expenses are covered.