It is Valentine’s day, and the little chap with the arrows has been as busy as ever. He leaves most of us with a partner or a family we want to love and provide for.
So, it is probably a good time to think about whether you have provided them with the financial security they need. It is a painful question, but it needs to be asked – how could they manage if you were no longer able to provide for them?
How much cover do your loved ones need?
Working out how much cover your loved ones need can be sobering. They would probably need enough to pay off the mortgage, and to take care of the monthly bills from food to council tax. With the mortgage paid off, you might not need to replace your entire income, but you might still need to cover a significant proportion of it.
You may not be the sole breadwinner, but your partner might need extra support without your salary coming in, especially if you leave children to care for. He or she might need extra help if they had to take on both full time job and childcare.
Joint cover can be a sound investment, especially as it can cost much less than two individual policies.
What kind of cover should you have?
Many of us already have life assurance to provide a cash lump sum for our families if we died.
To keep the costs of premiums low, many of us choose term insurance, which ceases 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 policy could provide for loved ones and keep more of your wealth out of the hands of the taxman, because the lump sum could pay off an inheritance tax bill.
But life cover, although essential may not be enough. You need to have a complete financial safety net to ensure that your loved ones can be provided for whatever happens.
A breakdown in your health could be as devastating for your family 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.
Accident or Illness could also make it impossible for you to work. Income Protection insurance could provide a replacement monthly income until you were fit again.
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 could work even harder and provide an income until your retirement age if you remained incapable of working. Most Long-Term policies don’t cover redundancy.
What will it all cost?
It is important to get the cover that best fits your needs and requirements. The cost of the cover you need will depend on many factors. How much cover you need is fundamental, and so is your age. The risks to your health and of death are higher in your 50s and 60s than in your 20s.
But the simplest way to save money and ensure that you have the cover you need is to call us at Continuum. We can help you decide what cover you need in your financial safety net, and search insurers to find the best price for it.
Insurance can seem complicated but getting the cover you need for your loved ones need not be. Simply call us today. We can help you arrange the combination of cover you need.
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.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The Financial conduct authority does not regulate taxation advice.
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