Life insurance - or is that death insurance?
Written by Trevor Keidan on July 24, 2017.
I’m on an insurance roll at the moment having covered travel and health insurance in my two previous posts (here and here). Now I’d like to turn your attention to life insurance, which is another vital cornerstone of a sound financial plan - albeit not the most pleasant one to contemplate!
Life insurance is a financial planning tool which protects your family against the untimely passing of the main income generator(s) in the family. There are a host of different options when considering life insurance from a whole of life policy with an investment element, to a term policy designed to cover a specific risk for a specific period and ongoing annually renewable policies. Your consultant should analyse your specific situation and needs and then discuss the options with you to ensure the most suitable policy is recommended.
The unexpected death of a breadwinner can leave a family helpless and without the means to continue to pay for things such as school, mortgages, car loans and general day-to-day living costs, but don’t overlook the contribution of a non-working spouse, who also requires some level of life insurance. If you had to pay for all the work that they carry out for free – including childcare, cooking, cleaning, shopping, chauffeuring – the cost would be significant. Not to mention the fact that if the spouse passes away unexpectedly then the main breadwinner may wish to be able to reduce the amount of time at work in order to be with the family, especially with young children. A well-thought-out life policy for both partners would empower the main breadwinner to be able to reduce hours, or indeed cease work, to be able to be focus on the children at such a difficult time.
The loss of a family member is devastating enough but this can be compounded by the freezing of assets immediately after a terrible loss for the duration of the probate process, which can be lengthy. This can make life extremely difficult for the surviving spouse and the family left behind. The solution to this is a comprehensive life insurance policy held in trust or ringfenced outside the deceased’s estate, which would pay out to your family immediately after death. This payment is often a lifeline which enables grieving families to continue to function and pay ongoing living costs during an incredibly sad and stressful time.
Life insurance policies are flexible tools and can also have combined riders which pay out in the event of total and permanent disability or critical illness. Additionally, some policies will have an accelerated payout which means that a payment is received on diagnosis of a terminal illness. This can be very beneficial and enable the policyholder to get their financial affairs in order before passing.
Nothing can make up for a terminal diagnosis or the terrible loss of a family member, but having life insurance cover can make living through it a whole lot easier. It provides peace of mind that if something did happen to you, your family would not only survive but be able to carry on their lives without financial pressure or burden. It’s something I strongly believe that no family should be without.
Our financial advisers have access to a wide range of policies and can help you deal with all the tricky questions regarding the type and amount of cover you need. Why not e-mail me at firstname.lastname@example.org and make an appointment to speak to us today?