Services Provided
Life Assurance

Life assurance is a staple form of protection that most of us not only understand by also see as a necessity. The most common reason for investing in life assurance will be to cover a mortgage but it is also part of the review we undertake perhaps after getting married, or more likely, when we have children.

For a single person with no dependents, life assurance may not be necessary. If you have debts and no savings, then a small amount might be necessary to pay expenses and prevent someone else being landed with those debts. There is also an argument that you should cover a mortgage but in this case, if you are happy to pass the property back to the bank, or if your beneficiaries are more than able to cover two or three mortgage payments whilst the house is sold, then there is probably no need for it.

If you have dependents, however, you need to look at the consequences for them if your income were removed. How much do you earn? Do you have debts? How much is your mortgage or rent? Do you pay school fees? How long before your children will be working? Does your partner work? Could they continue to do so without your support? Even if you don’t work, there can be a considerable cost involved in replacing what you do to look after children and/or the house.

Finally, life assurance can be used in inheritance tax planning. If you estate is above the threshold (£300,000 for 2007/08), if can prevent your beneficiaries from having to sell personal assets and sentimental treasures to meet the bill.

Health insurance
Regardless of whether you are single or have 10 dependents, if you are suddenly unable to work, your income disappears completely – and this has a direct impact on you as well as on those around you.

Permanent Health Insurance (PHI) is less well known than life assurance but potentially has more applications. What it does is replace your income in the event you are unable to work. Typically, you can cover up to three quarters of your gross income – less any state benefits which you become eligible for.

This income is paid until retirement age, until the end of the policy term or until you are unable to return to work, whichever is the earlier. Consequently, whilst you are rehabilitating or coming to terms with changes in your life, your financial position is secure and you are able to pay the same bills and keep up the lifestyle. This can be of particular benefit if you are self-employed, i.e. when your job does not come with any sick pay.

PHI is considered expensive insurance, however, it comes with a choice of deferment periods and extending this to meet your own needs can reduce the costs. The more savings you have, the longer you can fund yourself before a claim needs to start paying out – and therefore the cheaper the policy will be.

Critical illness
The other main type of cover which all of us should consider is critical illness cover. Like PHI, this pays out while you are still living but become incapacitated through serious illness or accident. Like life cover it pays out a lump sum, the objective of which is to help you fund changes which may need to be made to your lifestyle as a result of that illness.

For example, you may need to move house to be nearer relatives or friends. You may need to make changes to your existing house or meet new mobility requirements. Alternatively, you may simply want to give up worrying about money and make the most of your opportunities whilst you can.

Like PHI, critical illness can be just as beneficial, maybe more so, for single people with no dependents as it could be the only source of ongoing financial support in the event of serious illness.