Insurance...who needs it?

Tuesday, 24th June 2008 16:12 - by Resident IFA

lse.co.uk spent a lot of time selecting an Independent (aka Whole-of-market) insurance provider to team up with for the benefit of our site visitors…but no-one uses the facility! In life insurance terms alone, I have heard statistics quoting a £2.3 Trillion (that’s a lot of 0’s!) shortfall in the UK alone. This equates to around £57,000 for every adult, taking a sensible and realistic view by including such as unprotected mortgage debts, those with young families, and so on. I thought it might be good here, whilst not providing advice, to simply run through key types of insurance/protection covers on the market and those who might benefit from them. Type: Life insurance - A lump-sum (usually) benefit payable on death. Who might need or want Life insurance? - People with Mortgages, young families or expectant Parents, and those with potential Inheritance Tax (IHT) liabilities. Type: Critical Illness - A lump-sum (usually) benefit payable on the diagnosis, and survival for a prescribed period i.e. 14 days, of a specified Critical Illness i.e. Heart Attack, Cancer, Stroke, Alzheimer’s, etc. Who might need or want Critical Illness cover? - Everyone, as we all know the 1 in 3 cancer statistic…related to a 1 in 154 chance of a car accident! It can link to life insurance needs too, in that those with Mortgages may wish to incorporate the cover into their life policy. Type: Income Protection – Pays out a tax-free income up to a level, usually 66% maximum, based on your provable income when longer-term sick i.e. after a 3 or 6-month deferred (waiting) period. Who might need or want Income Protection (aka Permanent Health Insurance or PHI)? - Again, everyone! Who pays your income if you are self-employed? How many companies still offer good sick pay arrangements? The State now only pays mortgage interest after 9 months (to a limit of a £100,000 mortgage) and long-term incapacity benefit is only £84.50 per week (Source: direct.gov.uk). Type: Business – Usually versions of the Life and/or Critical Illness policies mentioned above. Who might need or want Business protection insurance? Those businesses with more than one Director and/or a 'Key-person' i.e. a person with specialist skills who the business and its turnover would suffer without. This cover may be particularly useful in regard to Director/Shareholder ‘Cross-option’ agreements and the like. If this Blog has struck a chord with you, or you just want to check the cover you have for appropriateness, cost competitiveness, etc., please seek Independent advice or visit http://www.lse.co.uk/insurance-home.asp Until next time…