Financial protection is one of the most overlooked areas of finance.
Saving and investing are important, of course, but ensuring our loved ones are provided for should the worst happen is also a key part of many financial plans.
Here are the five different types of financial protection that you need to know.
Anybody with dependants or outstanding debts such as a mortgage should consider taking out a life policy.
At the very least, it should ensure your family can keep their home, but ideally it would also provide an additional sum as a financial buffer at a difficult time.
There are different types of policy available, from ‘whole of life assurance,’ which covers you for your entire lifetime, to ‘term assurance’ policies which provide life cover for a fixed period of time - 10 or 20 years, for example - and are often used in conjunction with a mortgage.
These policies protect a portion of your salary, typically paying out between 50%-70% of your income. You will receive monthly, tax-free payments that will cover some of your lost earnings, if you are unable to work because of illness or injury.
They are vital policies for those with dependants and debts but the terms of these policies vary.
It is important that you understand the terms of the policy so you know the situations where you’re covered, how long it would be before payments begin, and to make sure your coverage suits your needs.
These policies pay out a lump sum on diagnosis of one of the critical illnesses covered by the plan which typically include strokes, heart attacks, certain types of cancer etc.
Each policy will have its own list of conditions it covers, and it is vital to familiarise yourself with the full list and when you can claim for these illnesses before you apply.
Family Income Benefit
Family Income Benefit is a term insurance which lasts for a set period of time known as ‘a term’. The policy will pay out a monthly, tax-free income if you die during the term, until the policy ends.
So, if you take a 20-year family income benefit policy and die after five years, it will continue to pay out for another 15 years.
There is no cash in value, so if you stop making premium payments, your cover will end.
Private Medical Insurance
This will pay for the cost of private healthcare treatment if you are sick or injured.
Premiums are paid monthly or annually but most policies do not cover pre-existing conditions.
To find out more about how Brewin Dolphin can help you protect your finances, request a call back today.
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Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances; therefore you should not rely on this information without seeking professional advice from a qualified tax adviser.
The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.
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