Financial Protection: Do You Have the Right Cover in Place?

Covid-19 has left many of us feeling more vulnerable than necessary. For many, having the right financial insurance in place has become more of a priority. Financial protection insurance is an important safety net, but with so many types of insurance cover available, it can be difficult to assess which is right for you.

Here at Pure Wealth Management, we are experienced at providing financial peace of mind. Below, we’ve compiled a list of the kinds of protection available and some key information to help you make an informed choice.

Keeping Track of Your Financial Health

Many clients have found that their circumstances have changed significantly since the start of the pandemic. These changes may include increased borrowing, growing families, separations, increased inheritance tax liabilities and increased health risks. It is crucial to ensure that your circumstances are reviewed regularly to take changes like these into account.

By taking the time to understand your financial health, perhaps with the help of a financial advisor, you can ensure that you or your business are covered adequately.

Types of Insurance Cover

There are several kinds of cover that can help maintain your financial security, regardless of what life brings. It’s important to understand their key features before you make your choice.

Life Cover

Pays out on death.

When setting up your life cover there are a few things to consider:

  • Do you have any outstanding debts or liabilities? If so, you may wish for a policy to pay the entirety of these sums so that your family are not left to pay these.
  • Would you like to leave a lump sum to your family to assist with adapting to the lifestyle changes that they may face?

If you have an active life cover policy, you should ask yourself:

  • Does the term accurately reflect your current circumstances?
  • Does the sum assured still reflect your outstanding liabilities?
  • Is your policy written in trust?

Business Protection

Pays out on death.

Types of Business Protection include Relevant Life, Key Person, and Shareholder Protection.

Relevant Life cover is a life cover policy that is payable from your business. The premiums are classed as a business cost, meaning this policy is likely to be more tax-efficient for business owners.

There are a couple of key questions you should ask that will help identify the right kind of cover for your business:

  • Would your business be able to operate successfully without replacing a key worker?
  • Would you like to be able to buy-out a deceased shareholder of your company?

Do you have a current policy? If so, ask:

  • Does the term accurately reflect your current circumstances?
  • Does the sum assured still reflect your company’s outstanding liabilities?

Income Protection

These policies will pay a monthly benefit, after a deferred period, in the event that you are unable to work due to accident or sickness.

This kind of financial protection is becoming increasingly popular, with many people needing firm reassurance that their finances won’t suffer if they are unable to work for health reasons.

If you’re considering taking out Income Protection, you should consider:

  • Do you require a monthly income to ensure that regular monthly outgoings and payments are made?
  • If you already have income protection, is the benefit level sufficient to reflect your current earnings and monthly outgoings?
  • How long will your cover pay out for?
  • Will you be covered for accidents suffered from recreational activities?

Critical Illness

Pays out in the event of a critical illness being diagnosed. These illnesses generally include cancer, heart attack, stroke and many more.

Some questions to consider before taking our Critical Illness cover are:

  • Would you require a lump sum payment to adapt to your new lifestyle in the event of suffering from a critical illness? This could be paying off an outstanding liability in the event that you are no longer able to work, or indeed to make changes to your living circumstances to reflect a more comfortable lifestyle for your condition.

If you already have this cover, does the sum assured still reflect your outstanding liabilities? Does the term reflect your circumstances?

When it Comes to Re-Assessing your Financial Health, Don’t Wait

If you are unsure whether you have the correct cover in place, or indeed if you would like to speak to an adviser here at Pure Wealth Management to assess your possible protection shortfalls, talk to a member of our Protection Planning team today.