Protecting your family in 2019

Christmas is a time for families. It is one of the few times of the year that we spend time together.

It also makes you realise how precious your family is, and just possibly wonder if you really have given them the financial protection they need. Giving them the insurance protection they need means more security for them, and real peace of mind for you.

It might even cost much less than you think.

What protection do they need?

Think carefully about how much your family needs each month to get by. If your monthly income was to stop coming in, they would need to have enough to replace it, to pay off the mortgage, and take care of bills, from food to council tax. There may be several different types of cover required.

Life cover: Most of us already have life assurance to provide a cash lump sum for our families if we died. But first, ask yourself if you have the level of cover you need? The growing cost of living means that a lump sum that seemed more than generous 10 or 20 years ago can seem much less adequate now.

Secondly, do you have the right kind of life cover?  For cost reasons, most of us choose term insurance, which will cease when we reach an agreed age. But we are living longer, and the danger of outliving our insurance cover is growing. A whole of life plan could keep wealth out of the hands of the taxman, i.e. as part of an IHT planning strategy, the lump sum that is paid out could be used to mitigate a potential  inheritance tax liability

Serious illness cover: A breakdown in your health could be as devastating financially as your death. Critical illness cover pays out a tax-free lump sum if you are diagnosed with an illness or medical condition specified in the policy. So, if you became too ill to work, you and your family could still have the cash you needed.

Where a policy has combined cover, the critical illness benefit would pay out on the diagnosis of a specified illness, the policy holder may recover or live with the condition in these circumstances the policy would not pay any death benefit at a later date and this could mean a loss of life cover.

Income protection: Accident and illness could make it impossible for you to work. Income protection insurance could provide a replacement monthly income until you were fit enough to return to work.

Short-Term Income Protection policies, or Accident, Sickness and Unemployment cover, will pay out for one or two years. Most Short-Term Income Protection policies can include cover if you are made redundant.

Long-Term Income Protection, as the name suggests, provides longer term cover. It may provide a regular income if you are unable to work due to illness or disability until you are well enough to return to work, until your retirement age or until the end of the policy term.  Most Long-Term policies don’t cover redundancy.

What are the costs?

The cost of the cover will vary based on many factors. How much cover you need is fundamental – obviously, a policy that offers a £million of cover will cost more than one designed to deliver half that.

Your current age is probably the next most important factor. The risks to your health and of early death are obviously higher in your 50s and 60s than in your 20s.

This is why arranging cover as early as possible can actually save you money – your premiums could be substantially smaller.

There are other factors to consider. Your health and your profession will influence premiums. This means that insurance can seem complicated and that getting the cover you and your family really need for the lowest cost is easier with some expert help. At Continuum we would be happy to provide it.

Your home may be repossessed if you do not keep up repayments on your mortgage

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

The levels, bases and reliefs from taxation depend on the individual circumstances of the investor