Life insurance, what you need to know!
-Life insurance is traditionally purchased to cover debts, cover a mortgage or to provide some form of family protection.
-Having someone else rely on you financially makes it even more important to have a form of life insurance in place.
-Several considerations need to be made when dependants are involved; such as evaluating how their financial situation will look going forward if the worst were to happen to you.
Who needs Life Insurance?
If you have any of the following you may need cover:
- Children or any other dependents
- Debts (loans, car finance etc.)
- Mortgage
- A business
- Potential Inheritance Tax Liability
Being retired or financially independent with no other person who would suffer financially if you were to pass away will mean it’s unlikely that you require life insurance. However, Critical Illness cover should still be something you consider as being diagnosed with a serious illness can drastically affect your lifestyle; irrespective of your financial situation.
The value of a stay at home Mum or Dad should never be understated. Legal and General have calculated that it would cost a staggering £30,032 per year to replace a house person!
What is a good insurance policy?
A good insurance policy will be medically underwritten at the outset. This will therefore ensure you know exactly what you can and can’t claim for. The questions will include medical and lifestyle questions to ascertain whether any exclusions need to be applied. Factors that will also affect the terms issued and premium include smoker status, ongoing medical issues and age. With so many variations and factors affecting premiums, it’s always a good idea to speak to a Financial Adviser who will be able to assist in obtaining the right level of cover at the most competitive premium.
Speak to an expert
Speaking to an expert will also be beneficial as many insurers offer additional benefits at either little or no additional cost which would be of use to the majority of people looking at life cover. One insurer offers a bolt on which allows access to industry leading medical treatment at the worlds best facilities at a fraction of the cost of traditional PMI cover. A lot of the insurers offer a support line for free where you can discuss topics such as health, employment law, legal issues and social support.
Another very useful feature of life insurance is that it can be used to cover potential inheritance tax liabilities. This ensures that your hard earned wealth built up over the years doesn’t suddenly have a 40% reduction that is swooped up by the chancellor in penal taxes!
Have Trusts
Lastly, it is imperative that in some scenarios the life insurance policy is written into trust. This ensures the sum paid out remains outside of your estate and therefore does not attract any inheritance tax allowing the proceeds to be used for whatever you intended the sum for. A trust also speeds up the time in which a policy is paid out as it eliminated the need for probate to be granted first; which can 6-8 weeks. With a trust, the cover pays out within 2 weeks.
To discuss Life Insurance further call on 01273 208 813 or email [email protected]
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IEP Financial is authorised and regulated by The Financial Conduct Authority (FCA)
The value of investments can fall as well as rise and past performance is not a guide to the future. The content of this publication is for information only. It does not represent personal advice or a personal recommendation, and should not be interpreted as such. Please do not act upon any part of it without first having consulted an Independent Financial Advisor.
