Insurance Advice

Here’s a practical overview of the two of the different types of insurances on the market that we are authorised to advise on:

Life Insurance

In its simplest form, a life insurance policy provides a lump sum (the sum assured) if the life assured dies during the term of the policy. The policy may be owed by the life assured or a trust or a business (key man protection) or another individual. A life insurance policy can also be assigned to a 3rd party (e.g. a bank).

There are many reasons why an individual, a couple, a trust or a business would consider investing in a life assurance policy. Let’s consider why a business would invest in a life assurance policy for example.

I often ask a business person has insured the desk that they are sat behind. I usually get a quizzical expression and they say, “of course, it’s insured under our buildings and contents policy.” I then ask if business has insured the person sitting behind the desk, to which they usually say, “no”.

Which would have the greatest negative impact upon the profitability of the business, the sudden loss of the desk or the sudden loss of the key person behind the desk?

It seems obvious doesn’t it, but you would be amazed how many businesses have made certain that the desk is insured but have overlooked the much greater significant risk to the business of suddenly losing a key man or woman.

Whilst it is difficult to insure against a key person suddenly resigning, it is relatively easy to set up key man protection to protect the loss of profits that would occur as a result of the sudden loss of a person as a result of death or serious illness.

Couples with children and/or mortgages and loans would be well advised to take out some life insurance to make sure that the surviving spouse and children are able to maintain their lifestyle in the event of an early and unexpected death.

Life insurance has become very flexible and very sophisticated in recent years. There are many types of policy available with level, indexed or decreasing sums assured, waiver of premium benefit, terminal illness benefit, critical illness cover, buyback options and so on and so forth.

Independent financial advice from a Chartered Financial Planner is the safest way for you to set up the correct type of policy and amount of cover based upon your needs and circumstances.

Critical Illness Cover

This type of insurance is designed to pay out a lump sum upon diagnosis of a critical illness such as heart attack, stroke or cancer. There is usually a waiting period before the claim is settled, which is typically 28 days.

This type of cover can be set up as a stand-alone policy or incorporated in a life insurance policy or endowment.

It is a popular addition to key man protection policies because it may provide a cash injection to the business is a key person is suddenly struck down with a critical illness and away from the business for an extended period of time.