For many of us, protection against financial consequences of dying,
suffering a Critical Illness or being unable to work due to ill health,
comes low down the list of priorities. However the implications on
you, your business or your family caused by such an event can cause
irrevocable damage to you or their standard of living.
When you're looking to the future, the last thing you want is anything
threatening your financial security or getting in the way of your
ambitions. But sometimes life just doesn't go according to plan and
that's where protection can help in safeguarding you against the financial
consequences of unexpected events.
Here is a brief explanation of the most frequently used types of protection
products:
Term Assurance
This is suitable for those requiring a specific
level of cover for a fixed period of time. It is the cheapest and
most commonly used form of Life Assurance and is often used to protect
the interests of young families with growing children. Premiums are
cheapest for those who are non smokers and in good health.
Critical Illness
This type of cover pays an agreed lump sum either
on death or on diagnosis of a serious or life threatening medical condition
or illness (e.g. heart attack, cancer, etc.) specified in the policy.
The proceeds from these policies can be very useful for adapting to
a new lifestyle caused by the illness, as well as supporting the family
financially. Policies are normally written on a term or whole of life
basis.
Whole of Life
This is used to provide longer term protection,
as the name implies, for the duration of one's life. These policies
can be very flexible and there are many types, so it is best to consider
the options carefully before deciding which is best for you.
Income Protection or Permanent
Health Insurance
This type of policy provides an income where
the policyholder is unable to work due to ill health or injury. The
benefit is paid until such time as a full recovery is effected and
is subject to a deferred period which normally takes account of any
employee benefits payable. The income is paid free of tax. Premiums
vary dependent on the occupation of the policyholder and whether they
follow manual or non manual occupations.
Family Income Benefit
Instead of paying a lump sum in the event of
the death of the policyholder, these contracts pay a regular fixed
tax free income for a fixed period of time. With this type of policy
it is possible to provide for the income to escalate to help offset
inflation.
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