Do you think that you have sufficient protection in place should any event potentially prevent you from realising your plans for yourself and your family? Ask yourself the question, ‘If I were to die prematurely, what impact would this have on my family?
Would they still be able to realise their plans and goals without me being around?’

And would you cope financially if you became unable to work due to an illness or disability? After all, we find the money to protect our property, car and other valuables for their full replacement value, but the one asset that keeps everything else going - ourselves - is often under-insured! Consider the following areas to see if we need to talk.

Permanent Health Insurance (PHI)
For most of us, our income funds everything. If it ceases, everything else stops, so how do you ensure its continuation? The answer is PHI, also now known as Income Protection Insurance. This is a form of protection that pays out a regular amount if you are unable to work because of sickness, accident or disability. Payments are typically made until you either return to work, retire, or until the plan ceases, whichever is first.
It can replace a percentage of your income, less any state benefits and cover provided by your employer. The payments are tax-free and commence after a period that you specify. You can also decide at outset whether, in the event of a claim, you require the benefit payment to remain level or to escalate annually.

Critical Illness Protection
Critical illness protection is an insurance that pays out on the diagnosis of certain specified critical illnesses following the survival of a specified number of days after diagnosis. The illnesses covered vary from policy to policy, but they usually include these core conditions: cancer, heart attack/coronary bypass surgery, kidney failure, major organ transplant, multiple sclerosis and stroke. The benefit payment is a lump sum amount payable tax-free.

The financial consequences of not having critical illness protection could be significant. Calculate the size of your outstanding mortgage, other liabilities and other financial commitments. Would you be in a position to repay them if you were diagnosed as suffering from a critical illness, or do you have a shortfall?

Life Assurance Protection
It’s not a particularly pleasant thought planning for your premature death. However, if you have dependants, it’s essential. Life assurance can be used to replace lost income for dependants or to provide a capital sum to repay your liabilities. When was the last time you reviewed your cover?

The Financial Services Authority does not regulate some aspects of protection.
Article date 03/04