How Can I Protect Myself and My Loved Ones Should Worst Come to Worst?
Financial Adviser at Amicus Wealth
How much do you think you’re worth? At one point or another, we all need to put a value on ourselves. It seems silly that we insure other things before we do ourselves - you probably insure your phone, your car, your house and even your cat - but do you have insurance for yourself? It’s time to stop finding excuses and think about those most likely to be most affected should the worst come to worst. Find out how you can protect yourself and your loved ones starting today with Rachel.
Following Vestpod’s newsletter on the 16th of February: “No one likes to think about life insurance, much less talk about it or buy it. At Vestpod, we think it’s important to be pragmatic when it comes to taking care of your loved ones, and life insurance could make all the difference. To determine whether you need it, ask yourself two key questions: do you have dependants, and would they suffer financially if you weren’t around to provide for them?”
At one point or another, we all need to place a value on ourselves. How much do you think you’re worth? It seems silly that we insure other things above ourselves, when the most valuable asset is our life - not only to us, but also to our families.
You probably insure your phone, your car, your house and even your cat - but do you insure yourself?
Be honest with yourself and answer these questions: how would your dependants suffer financially if you weren't around to provide for them? How would your lifestyle suffer if you fell so ill you couldn’t work and provide an income? The 3 main eventualities we need to plan for are (1) losing your job, (2) becoming ill and being unable to work and (3) dying. These 3 things will affect our lives and financial plans differently so we need to decide which of these will affect us the most, what problems it will cause and how we can protect ourselves against it.
Income protection will pay a maximum of 65-70% of your gross income on a monthly basis for an indefinite period, or until you are well enough to return to work. It will not pay out if you lose your job. If you want cover for losing your job, be mindful that it can be more expensive, depending on your occupation. Look into Accident, Sickness and Unemployment Insurance or Mortgage Payment Protection Insurance. Regular income protection covers you only if you are incapacitated and hence unable to work due to illness or accident. Your employer will normally give you income protection as a staple work benefit at no extra cost. For those of you who are self-employed, you don’t get this luxury, so may want to take this insurance out privately. There are 3 types of income protection being ‘own occupation’ (unable to carry out your own job), ‘suited occupation’ (unable to carry out a job that you are suitable educated or trained for) and ‘any occupation’ (unable to carry out any job at all). The cost can reduce by selecting ‘suited’ or ‘any occupation’ rather than ‘own occupation’ or by selecting a greater deferral period (the amount of time between making the claim and receiving benefits.
The downside to this type of insurance is that it can be expensive and difficult to claim - only 1 in 15 people make a successful claim on their policy.
Critical Illness Cover is a popular option as you have complete freedom to choose the benefit amount. It pays you a tax free lump sum on diagnosis of a specific illness or injury listed in the policy. The cash benefit can help pay off your mortgage, debts, or pay for additional medical help, but it’s up to you how you spend it - you could just buy a Ferrari or a luxury yacht. Most policies cover around 50 illness such as cancer,heart attack, stroke, MS. You should check the policy details as not all conditions will be covered, and policies will also state how serious the condition must be. Some policies will make a smaller payment for less severe conditions, or if one of your children has one of the specified conditions.
The Association of British Insurers (ABI) sets a standard definition of each condition in their statement of best practice for Critical Illness Cover. Now some policies offer ABI plus definitions which which is a bonus as their definitions for some illnesses exceed their standard. You probably won’t be covered for health problems you know you have or have had. The cost depends on the amount of cover, the term you want, your age (older you are, more expensive it is) and the underwriting - how much of a health risk are you to the insurer. If you have any family health problems, have any medical conditions, smoke or are overweight, expect to have some illnesses excluded or to have more expensive monthly premiums.
Life Cover will pay out a tax free lump sum to your dependents on your death. Most employers will offer ‘death in service’ which pays out a multiple of your salary, usually 4 times your basic annual salary, if you die. Be aware - if you change jobs you will loose this insurance. So it’s always important to check what your new employer will offer you so you can top up any shortfall by taking out a personal policy if necessary.
Private Medical Insurance is usually thrown in with your work benefits but if you don’t want to rely on the NHS and can't be dealing with a waiting list to see a GP, you can take out private medical insurance. I would class this as a luxury rather than a necessity. You pay monthly premiums for access to private medical care for a variety of treatments - from ‘acute’ conditions that require urgent treatments to a better selection of specialised hospitals or doctors, therapies and complementary medicines such as acupuncture or chiropody.
Generally speaking, those of you who are employed will have the basics covered and it’s just a case of checking you have the right levels for your needs. If you are self-employed, you will need to cover all areas with private insurance. So it's a good exercise to ask yourself the questions ‘What will I do if the worst is to happen?’ or speak to an adviser about what you need to protect yourself against and how to best do it.
Financially protecting yourself and your family is the most important part of financial planning because if anything happens to you or your income, your plans can come crashing down if you're not prepared. You can have all the sexiest investments in the world but if you don’t have the foundations in place, all you are doing is building a house on sand - and who wants to do that?
*This is not a sponsored post*
Written by Rachel Copley, DipFA, M.S.
Rachel is a Financial Adviser at Amicus Wealth.
As a child I always wanted to be a vet. I know my job now couldn’t be further from that but I guess the same principles could apply in that rather than helping animals, I am helping people. I know from a young age that I wanted to do something meaningful.
I graduated from Oxford University with a Masters in Chemistry. Although I loved working in science and looked great in lab glasses, I knew that a career working in research and development was at the time hard to find. A lot of pharmaceutical companies were going through large cut backs and by simply doing the maths this area unfortunately couldn’t offer me the financial benefits I need to do everything I personally aspire do to in life (if anyone has ever owned a horse, you know what I’m talking about). In addition I wanted the freedom and self-fulfilment of building something that was my own.
The financial adviser industry when I started was known for being stuffy, backdated and dominated by 50 year old men. I saw a great opportunity within Amicus Wealth to break this mould and work with like-minded ambitious individuals who want to apply their life skills to their career and in turn advise their clients in the best way they can by using simple language we all understand, uncomplicated by financial jargon and ultimately helping clients draw the parallels between their financial planning, their lifestyle and their personal success and happiness.
Start laying your financial stepping stones by arranging an initial chat or consultation with Rachel. You can contact her on: rachel.copley@amicuswealth.co.uk or 02037276670 / 07533478925.
Amicus Wealth Limited is an appointed representative of Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited, which are authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 08861673. You can find out more on the website www.amicuswealth.co.uk.