Wanting to protect those that you care most about is a feeling that comes naturally to us all. One of the most important ways you can do this is to make sure your family is protected financially.

There are a number of questions we should ask ourselves when looking at financial planning such as, if you were to pass away suddenly would your family have sufficient money to survive? Could they afford to pay the mortgage payments without your income? What would happen if you were to be taken critically ill? Who would pay the bills if you were off work with a long term illness? How long would your employer pay you sick pay? If you have answers to these other than ‘I don’t know’ that’s great, but from our experience most clients don’t.

At Base Financial we offer advice on all areas of protection. We find that the most common areas that people want to protect are ensuring the family is able to stay in the family home in the event of an income stopping suddenly and simply ensuring there is enough income to pay the bills in the event of an illness preventing a major income earner from working.

There are a number of different types of insurance available and those types of insurance can be set up in a number of different ways, we are here to help make sure your family protection is arranged in the right way. Below are the main types of insurance available with some examples of how they could be used.

Term Assurance

If you pass away within a set period there is a sum made available to the beneficiaries of the policy. This sum could be used for a number of purposes. Most commonly its used to repay a mortgage but could also be used to provide a lump sum to help pay for a potential inheritance tax bill or a lump sum that can be used to provide an income. It can be set up with varying terms, such as 25 years to cover a 25 year mortgage. It can also be arranged with the amount of cover remaining level through out the term, on a reducing basis so that it keeps in line with a mortgage that’s been set up on a repayment basis or an increasing basis, perhaps to ensure a lump sum to protect your family keeps pace with inflation.

Critical Illness Cover

If you were to contract a critical illness such as a heart attack or stroke then there would be a sum made available to the beneficiaries of the policy. Quite often, Critical Illness cover is combined with life assurance as part of a package to protect a mortgage. There are again a number of options available, similar to term assurance in that terms and level of cover are set at outset but another major factor is the difference between providers. Some cover more illnesses than others, some pay out more or less for different levels of severity of the illness the policy holder. Finding the right provider for you is really important.

 

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Whole of Life

This type of policy will provide cover for the whole of a policy holder's life. There are a number of ways that a whole of life can be used to benefit those it protects. A common use is to set up a relatively small policy to help pay towards funeral costs as an alternative to a funeral plan. It could also be used to provide funds to pay inheritance tax bills. A Whole of Life policy will likely cost more than a term assurance policy as it is certain to pay out as it is a ‘when you die’ policy whereas a term assurance plan only pays out if you die within a set period.

Income Protection

An income protection policy very basically, as its name suggests, protects your income. It is a policy that will pay you a monthly income should you be unable to work due to sickness or accident. The income would be paid until you either are able to go back to work or until your normal retirement date should you never be able to go back to work again. There are a number of variants involved when setting up an income protection policy such as the amount of cover, will the level of cover to increase in line with the cost of living and how long from the onset of being unable to work would the cover start. All these options are important and need consideration.

Setting Policies Up In Trust

With the exception of income protection, most insurance policies should be set up in trust. There are several reasons for this is. Firstly, it ensures that the policy goes straight to the beneficiaries you want it to rather than going into your estate. Secondly, once it is in your estate it could be subject to inheritance tax. There are a number of different types of trust for different situations. We can advise you on the one that suits your requirements.

As you can see there are a huge number of options available to you. We can help you choose the right ones. Although all of the above policies are important, it is not very likely unless you are very fortunate, that your budget to protect your family will allow you to cover all eventualities. At Base Financial we can help you arrange you protection in the most appropriate way within your budget and guide you through all the pitfalls that there are out there to ensure your family is protected in the best way.

"Christian has been helping me with independent financial advice for a number of years now. One highlight of the excellent service he offers has been with my pension. I had a number of pensions that were difficult to keep track of and not performing to full potential. Christian did a great job of consolidating these into a single, manageable pot. He did all the legwork and clearly explained the investments available together with the associated risks. This really helped me to decide how the portfolio should be invested and the level of risk I am comfortable with. As a result I now have a single, manageable, good performing pension pot. It has made my life easier as I recently retired and accessing a regular income is now straightforward."

Mr Jim C - Sevenoaks