Protection
Two of the main reasons you might take out Protection are:
- To provide money for people who depend on you.
- To provide money for yourself in times of need. We arrange many types of protection including life cover, critical illness cover, income protection, accident, sickness & unemployment cover and buildings and contents insurance.
Life Cover
The following are all types of situations which where taking life cover may be a consideration:
- Mortgage - If the house is to be lived in by your partner or your children, then you may wish to ensure that any mortgage is repaid in the event of a premature death.
- Money for dependents - If you have small children then money will help provide for them, perhaps by allowing the surviving partner to stay at home or work part time for several years.
The good news is that many people already have existing life cover and this quite often is sufficient for their needs.
The other good news is that the cost of life cover has fallen dramatically in recent years and you may be able to replace an existing policy with one which is much cheaper than you are currently paying.
At the time of writing there are a number of companies who would provide £ 100,000 of cover for a male aged 30 next birthday over a 10 year term, non-smoker for less than £ 10.00* per month and as low as £ 7.35 per month.
This is based on an individual with no health problems and standard underwiting criteria.
If you are in a company pension scheme that does not provide life cover, are self employed or have dependents, it is essential you have your position assessed.
Critical Illness
This is a policy which would potentially pay out on diagnosis of a specified critical illness. The illnesses will vary depending on the policy and you should refer to the policy document for a full list of inclusions and exclusions. Examples of critical illnesses are cancer, stroke and heart attack. It may well be that on diagnosis you are unable to work again yet have a relatively large mortgage. A critical illness policy would potentially pay off the mortgage.
Income Protection
This is a policy which pays a 'replacement' income in the unfortunate event of you being unable to work. It is usually payable from a defined point until either you return to work or reach retirement, whichever occurs first. The amount of benefit is usually calculated as an amount equivalent to a percentage of income.
Accident, Sickness & Unemployment
Accident & Sickness protection is designed to pay your mortgage payments whilst you are unable to work e.g. illness or injury. The period of cover is also usually restricted to a maximum period depending on your requirements, e.g. 12 months or 24 months. This is not to be confused with income protection.
Unemployment protection is designed to pay your mortgage payments if you become unemployed e.g. redundancy. The period of cover is also usually restricted to a maximum period depending on your requirements, e.g. 12 months or 24 months.
All insurance is based on an assessment of the health of the applicant and is unlikely to cover the applicant for previous or existing medical conditions. The applicant should refer to policy documentation and seek advice in order to understand what the policy does and does not cover before making an application
Buildings & Contents
The buildings part is to insure your home and the contents is to insure your contents.
*Life & Pensions Moneyfacts October 2009
