Personal Financial Protection
A sound financial protection portfolio is considered to be fundamental to the success of other planning such as medium to long term savings & investments or retirement planning. It only requires one serious event in ones life to undo years of careful preparation and planning.
Financial security and peace of mind can be gained from constructing a financial protection portfolio. In this regard, there are three types of insurance that should be given due consideration:-
Income Protection
Designed to typically replace up to approximately 50% of your earnings in the situation that you are unable to carry out your occupation due to long-term ill health or disability. There are various aspects to consider in this regard such as your occupation and the definition of disability, the definition of earnings upon which cover can be calculated, level of cover required, level of existing sick pay entitlement, the deferred period and retirement age.
Life Assurance
There are many reasons why one might consider life cover. Examples of these are to cover financial liabilities such as a mortgage or loan, to provide additional personal or family orientated cover, to replace lost death in service benefits for those that move from one employer to another or indeed leave employment altogether to become self-employed, to cover maintenance payments, to cover private school fees or to provide for Inheritance Tax (IHT).
Careful consideration should be given to the type of cover to satisfactorily address your needs as there are a multitude of different options; level, increasing, decreasing, family income benefit, mortgage protection and whole of life. The chosen option can also greatly influence the cost.
You should also ensure protection is adequate. Whereas it can be relatively straightforward to determine the required level of cover to protect a mortgage for example, it may not be quite so easy to determine what might be required to provide personal protection over and above that.
A further and very important consideration when effecting life cover should be the use of trusts. There can be considerable delays in claiming against a life policy due to the time taken to obtain Grant of Probate. This can easily be avoided by writing a policy under trust. Without care for such planning, you could also be inadvertently creating or accentuating a liability to IHT, with as much as 40% of such provision unwittingly directed to the Chancellor’s coffers.
Decisions regarding life cover provision should not be taken lightly. Although your needs may indeed be satisfied by one simple policy, it may be that a combination of plans may be required.
Critical Illness
Designed to primarily pay a lump sum in the event of you contracting any one of a whole range of critical illnesses such as cancer, heart attack, stroke, paralysis, blindness, and brain tumour. A good, ‘standard’ policy would cover at least 25 to 30 serious illnesses, although recent innovations in the market has not only seen the launch of an entirely new product but has also given rise to a totally new approach to the critical illness insurance market with coverage of well over 100 critical conditions.
Price is often a driver in making decisions regarding financial protection provision, however, one should not overlook the features and benefits of contracts to ensure it is appropriate to your individual circumstances.
Warr & Co Independent Financial Advisers welcomes the opportunity to discuss financial protection planning with Pharmacists and Locum Pharmacists alike. Please feel free to contact us to discuss your protection planning needs.
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