Financial Protection
Financial protection is designed to cover low risk, high impact scenarios and can help you sleep easier knowing that your family will be okay if something unexpected were to happen.
We hope it’s the biggest waste of money in the world, but we continually see scenarios where these policies provide support for families in need. There’s is a difference between a financial protection salesperson and a true financial planning expert.
There’s a difference between a financial protection salesperson and a true financial planning expert. We provide advice only when we understand:
For each of the scenarios of death, long-term ill health and critical illness, imagine what life might look like.
The sorts of questions we ask are:
• Would you continue to work and in what capacity?
• Where would you choose to live?
• Are there any additional childcare needs?
• What sort of lifestyle would I lead with my children?
We then start to put numbers to your wants. If possible, break these down into lump sum amounts for short term needs and income for longer term needs.
Short term need could include debt repayment and a temporary break from work. Longer term needs could cover childcare or reduced future earnings from taking on a part time role and the loss of an income.
We use this information to estimate a monetary lump sum need and an income need for each scenario.
1.
What you want
We ask questions about what life would look like in different scenarios and listen.
You may already have some financial protection in place and it’s important to understand your current position.
If you’re employed, you’re likely to have employer benefits which could support your family in the event of death or ill health. Most common types of employer benefits are:
• Death in service. Often paying out a multiple of your salary on death.
• Sick pay. Understanding how long you will be paid if you are unable to work is important.
• Income protection. Could pay you a percentage of your salary if you are unable to work for the long-term. Benefit is likely to be subject to income tax.
• Critical illness. Paying a lump sum on diagnosis of set types of critical illness.
• Pension death benefits. Most new parents won’t have accrued lots of pension benefits, but these are worth noting as part of your research.
It’s important to consider how long you’re going to be at your current employer if you are including the benefits in what you have. Any move to self-employed or a start-up company could see a reduction in your current protection.
You may also have personal policies that have been previously taken out. Key facts we need to know are: the amount of cover, remaining term, current premium payable and terms of the contract.
State support could provide a very basic standard of living in some scenarios. Living on state benefits should be seen as a last resort in our view.
2.
What you have
We understand what financial protection you already have in place.
It’s the crunch moment, we’ve worked out what you need but how much does it cost each month? Is it affordable from your surplus income? How does it compare to what you expected?
We’ll present our recommendations and the options available to you.
If you are comfortable with the monthly amount, then you can move forward to implement the policies needed to meet your protection gap.
If the monthly premiums are not affordable, we may need to strip back your wants to a more basic standard of living.
3.
What you can afford
We consider how much financial protection you can afford.
To establish what you need, you must work out your ‘protection gap’. Simply, what you want minus what you have.
The next challenge is to fill that gap for each area of the matrix with appropriate protection policies, using insurance companies’ products.
We’ll independently research the best financial protection policies for you at the lowest price available.
4.
What you need
We establish what level of financial protection you need.