PROTECTION

We all have financial commitments whether it be a mortgage, rent and other daily living expenses form food, clothing, car, gym membership, council tax, utility bills, the list goes on and on. There are any number of reasons where we can find ourselves unable to work for short or even long periods and the added pressure of having to pay mounting bills is the last thing anyone wants to worry about. At CSR Financial Services we will discuss your particular situation and concerns and build your protection needs around your individual circumstances and budget.

There are several options available to you each of which we have described in brief below.

The main concern for most people is to protect their family in the event that the worst happens, and they die suddenly or are diagnosed with a Critical illness means they are unable to work for prolonged periods and require to undergo treatment. The most common of these is Cancer, Stroke and Heat Attack which make up 83% of all claims. With 1 in 2 of us likely to contract some form of cancer (www.cancerresearchuk.org, 2023) within our lifetime this is most common type of protection purchased in the UK. In short, the lump sum is paid out either on death of the policy holder or diagnosis of one of the defined conditions which can be used by the policy holder to pay of any debt or simply use to cover daily living expenses. Policies of this type are normally linked to the term of a mortgage after which they will end. There is no ‘cash in’ value to this type of policy.

This type of cover pays out a percentage of the policy holder gross annual income in the event that they are unable to perform their normal daily working activities. The payment can be made weekly or monthly and ensures that the policy holder has a regular income whilst they are unable to work. This type of policy is useful in particular for the self-employed who rely entirely on being able to work to make an income but would suit anyone who wants the peace of mind in knowing that household expenses can be covered should they fall ill for any number of reasons. Most people will put cover in place until retirement at which point the policy and cover will end. There is no ‘cash in’ value to this type of policy.

This type of policy is often seen as a more cost-effective way to protect family in the event of Death or being diagnosed with a Critical Illness. Unlike a typical Critical Illness Policy this policy will pay out a monthly benefit for a specific term not a lump sum. Clients will often feel their most vulnerable time is whilst raising a family so the term will be linked to the youngest child reaching the age of 18 or 21. The policy will only last for the agreed term and there is no ‘cash in’ value to the policy. The main reason this type of cover is more affordable is simply due to the fact the insurance company pay a monthly benefit to the client and not a lump sum.

With more of us building up equity in our homes and just as many finding our pensions not performing the way we would like equity release is one of the fastest growing lending markets in the UK. Many parents are finding themselves having to help their children with a deposit to purchase a home or simply want to gift family their inheritance whilst they are still here to see them enjoy it. In a recent shocking statistic, the ‘bank of mum and dad’ was said to the 9th largest lender in the UK. In simple terms the equity available in the property is released to the homeowner in cash. The method of repayments can be structured in a number of different ways to suit the homeowner. One option is to simply allow the monthly interest accrued on the loan to ‘roll up’ until the homeowners die, move, or go into long term residential care at which point the property is sold and the loan, along with any interest accrued is repaid. This type of loan is normally carried out with the input of the homeowner’s family and legal counsel.

This type of cover provides clients with a ‘fast track’ facility to medical diagnosis and treatment that may be available through the NHS. The level of cover available and the associated costs will vary dependant on the needs and service levels expected by the client as well as the client Geographical area. Costs for those in London for example will be much higher than those living in Dundee or Glasgow.

As well as more specialist types in insurance we can also arrange buildings and contents cover for clients on request.

There are a number of Insurance Policies available for Business’ from Sole Traders, LLP’s and Ltd Companies to protect anything from company loans, Directors shareholdings and Key People within an organisation. The design of any policy Sum Assured and payment structure as well as tax implications or benefits will be dependent on the structure and type of company as well as a number of other factors which would be discussed at an initial meeting.

Most Protection policies are now written in ‘Trust’ where a ‘trustee’ is appointed in the event of the death of the policy holder or the inability of the policy holder to make decisions. There are a number of benefits to this, but the main advantage is the speed of payment. In the event of any claim, the creation of the trust sets the ‘benefit’ (payment) outside of the policy holders’ estate. There can also be wide ranging IHT benefits to creating a policy in trust which should be discussed with a tax specialist.

Wills and trusts are not regulated by the Financial Conduct Authority and we are not authorised via PRIMIS Mortgage Network to advise on them

The creation of a Will is paramount when we discuss any type of policy for a client as this is the cornerstone of financial and estate planning in the event of someone’s death. A properly drawn up will provide the policy holders family/legal representatives with a clear path on how the estate and insurance policies should be distributed.

Wills and trusts are not regulated by the Financial Conduct Authority and we are not authorised via PRIMIS Mortgage Network to advise on them