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Life assurance: what are my protection options?

Life assurance policies give you and your loved ones peace of mind by helping to make sure there will be enough money in place to cover bills and other expenses after you pass away or become unable to work.

Life’s unpredictable at the best of times – we never know what it might throw at us. Unemployment, an accident, ill health or the death of a wage earner can plunge a family into real financial hardship. As such, life assurance – also referred to as life insurance, life cover and level term assurance – is an option that everyone should consider, even those without dependents or a mortgage.  Unless you have substantial savings or inherited wealth, chances are you will rely on your salary to pay for everything. It is therefore important to put sufficient protection in place to help give you peace of mind that, if the worst does happen, the bills will still get paid.

Over the years, you may have taken out different assurance policies to give you and your family financial security. It’s important to make time to review these policies, and the level of cover they provide, to ensure they are still the best option for you.

Life cover protection

Life cover protection is designed to protect your family and other people who may depend on you for financial support. It pays a death benefit to the beneficiary of the life assurance policy.

If you have people depending on you, or outstanding debts such as a mortgage, at the very least it should ensure your family can keep their home. Ideally, it should also provide an additional sum as a financial buffer at a difficult time.

There are different types of policies available. These range from ‘whole of life assurance’ which covers you for your entire lifetime, to ‘term assurance’ policies, which provide life cover for a fixed period of time – 10 or 20 years, for example – and are often used in conjunction with a mortgage. 

Income protection cover

If something happened to you which left you unable to work, would you be able to survive on your savings or on sick pay provided by your employer? If not, you may need to consider another way to keep paying the bills. Income protection cover is designed to give you protection if you can’t earn an income due to ill health, a sickness or disability. These policies protect a portion of your salary, typically paying out between 50-70% of your income. You receive monthly, tax-free payments that cover some of your lost earnings if you are unable to work.

These are vital policies for those with dependents and liabilities. They pay out until you start working again, or until you retire, die or the end of the policy term; whichever is sooner. They cover most illnesses that leave you unable to work. You can claim as many times as you need to while the policy lasts.

Critical illness cover

If you are diagnosed with a critical illness, it can have a severe impact on your finances. You may need to take time off work for your treatment and recovery. Critical illness cover pays out a tax-free lump sum if you’re diagnosed with, or undergo surgery for, a specified critical illness that meets the policy definition.

It’s designed to help support you and your family financially while you deal with your diagnosis; you can focus on your recovery without worrying about how the bills will be paid.

Each policy will have its own list of specified conditions it covers. It’s beneficial to familiarise yourself with the full list and when you can claim for these illnesses before you apply.

Family income benefit cover

Family income benefit is a term insurance that lasts for a set period of time. If something were to happen to you, you would want to be sure your family is taken care of.

The policy will pay out a monthly, tax-free income to your family if you die during the term until the policy ends, so if you take out a 20-year family income benefit policy and die after five years, it will continue to pay out for another 15 years.

Private medical insurance

Private medical insurance will pay for the cost of private healthcare treatment if you are sick or injured. If you don’t already have it as part of your employee benefits package, and you can afford to pay the premiums, you might decide it’s worth paying extra to have more choice over your care.

It gives you a choice in the level of care you get and how and when it is provided. Basic private medical insurance usually picks up the cost of most in-patient treatments and day-care surgery.

Some policies extend to out-patient treatments (such as specialists and consultants). These might pay you a small amount for each night you spend in an NHS hospital. Premiums are paid monthly or annually, but most policies do not cover pre-existing conditions.

Protecting yourself and your loved ones

Putting in place sufficient life assurance provides peace of mind that if the worst happens, bills will still get paid. At George Square Financial Management, we can help you put in place a safety net that can ensure that your dependents are financially protected.

To discuss what life assurance options are best for you and your family, call the George Square team on 0115 947 5545 or send us a message here.

Life insurance plans will have no cash value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

Critical illnesses plans may not cover all definitions of critical illness. The definitions vary between product providers. They will be described in the key features and policy documents if you go ahead with a plan.

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For further information on how George Square Financial Management can help you protect and build on your finances, please complete the enquiry form below.

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