Protecting Your Lifestyle

If you do not have any dependents, your protection priorities are centred around maintaining your independence and your lifestyle. In the event that you are unable to work, you need to ensure that you can still manage your outgoings, adapt your living space, hire a carer and maintain your independence.

We often ask clients buying on their own "what would you do if you had an accident or illness and were unable to work, how would you pay your mortgage?"
The immediate answer is "my parents would take me in".
After further exploration most people realise that aging parents either may not be fit enough to act as carers or if retired will not have the financial resources to bail them out.

How attractive is moving back in with your parents after having had some independence, if it was that good you would never have moved out in the first place.

So what action can you take to ensure you can manage if you cannot continue to work.

You can protect yourself with cover for critical illness or protect your income

Critical Illness Insurance

For many who suffer a serious critical illness, the survival rates may be growing in terms of years. However, despite their survival, the sufferers often remain incapable of earning a living. Then, their loved ones have to bear both the duty of looking after YOU and having the money to keep the family going at the same time.

This type of policy will pay you a lump sum, in the event that you are diagnosed with a specified critical illness. There may be a survival clause ie you must survive for 28 days after diagnosis for example.

You can cover yourself for whatever figure you feel is necessary. Often the following is taken into account when assessing your level of sum insured:

• The cost of adapting your home, or moving to more suitable premises such as a bungalow
• The cost of providing suitable transportation
• The cost of funding your own treatment
• The cost of taking a holiday or convalescence

There is no right or wrong answer, some people decide to cover themselves for the amount of their mortgage and other debts and one years income.

The younger and healthier you are, the cheaper the premiums.

Don't leave it too late

Just like making a will, deciding on Critical Illness Insurance is something that many people prefer to put off. But, remember we are all at risk and sooner or later, it could be you who is diagnosed. How grateful would you be to have a Critical Illness policy to support you in those troubled times? Would a tax free lump sum payment be the answer? If so, Critical Illness insurance is the cover for you. No-one expects to become ill but ask yourself one question - do you know anyone that has recently contracted a serious illness that has changed their lifestyle? If so it could be you they talk about next time.

Income Replacement

A policy which covers you for a sum based on a percentage of your income. This will generate a regular monthly income rather than a lump sum, and cover you up to your normal retirement age.

Many individuals believe that their employer will look after them long term in the event of illness. But have you actually looked at your contract. Many employers offer 3 or 6 months at full pay and then perhaps reduced pay for a further period.
So how would you pay the bills and manage your lifestyle when your income reduces or disappears. Current levels of government benefit usually fall below the necessary levels and is designed to provide a minimum safety net only.

In the event that you lose your ability to work (and therefore ability to earn sufficient income) you would still require an income to meet your normal living expenses and maintain independence. Benefits would normally commence after an initial 'waiting' period of between1-12 months (decided at outset by you) and would continue until your retirement age, or until you return to work (whichever occurs first). Income replacement is essential for those whose employers do not provide it, or anyone who is self employed.

Ring 'Mortgagehunters' today to ensure your lifestyle is protected

 

HM revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.