How to protect your family’s future
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A sudden disease. An accident at work. A young, reckless drunk driver. There are, sadly, countless reasons why a family might lose its breadwinner - its main source of income.
During a dark and difficult time it can be tough to think about the financial safety of your family and protecting their future. But it’s an important conversation to have.
Fortunately this concern can be easily prevented with a little bit of forward planning, in the form of life insurance.
You can’t rely on the government to take care of your family – the money they would get from the state is much lower than you’d probably expect. If you want to provide for your family financially if you die, life insurance is a must.
Life insurance can pay your dependents money as a lump sum or as regular payments if you die. It is designed to provide you with the reassurance that your dependents will be looked after if you’re no longer there to provide.
The amount of money paid out depends on the level of cover you buy. You can also decide how it is paid out and whether it will cover specific payments, such as a mortgage.
If you have dependents – such as school age children, a partner who relies on your income or a family living in a house with a mortgage that you pay – a life insurance policy can provide for them if you die.
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No matter the size of your family and the number of your dependents, there are different plans to suit every situation, beginning with four main life insurance plans.
Term assurance is the most common type of life insurance bought in the UK, which is typically used for family and/or mortgage protection. A term and an amount of cover are chosen, which stay the same until a claim is made or the policy ends. Premiums typically remain fixed during the policy term, and the sum assured is paid out as a lump sum.
Critical illness insurance is a long-term insurance policy to cover specific serious illnesses listed within a policy. Should the worst happen, it gives a tax-free ‘lump sum’ – a one-off payment, to help pay for your mortgage or rent, debts, or pay for alterations to your home such as wheelchair access should you need it, but it’s your choice how you spend it.
Relevant life policies are stand-alone ‘single life’ plans that are potentially suitable for any employee. It’s set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the person insured.
Perhaps the most underrated of all protection products, Family Income Benefit pays a tax-free income instead of lump sum. Premiums are comparably low as claims could occur towards the final years of a policy, meaning that just a few years of income are paid. However, should a claim arise early, when the money is really needed, the policy can be incredibly good value for money, such as in cases of families where dependents may suffer financially if the breadwinner dies.
If this is all seems a little overwhelming, it doesn’t have to be. Financial planners like KDW specialise in advising people on the best policies that will ensure financial security in the event of them developing a critical illness or passing away. Much like grief itself, financial planning is never something that people should – or indeed have to – do alone.
The cost of life insurance policies will vary based on the age and health of the policy holder. A Level Term Life Assurance policy for a 35 year old female non-smoker covering her to age 65 for £500,000 with guaranteed premiums would cost from £29.95pcm
For more information about financial planning contact KDW on 01727 852299 or visit www.kdw.co.uk