Family Protection
Life assurance costs have generally fallen during the last decade, so plans put in place in the 1990s may no longer represent the best deal. More importantly, policies set up as much as ten years ago may no longer be adequate to provide the protection that your family needs to cover outstanding mortgages.
It is also important to remember that it is not just the principal breadwinner who needs insurance. A "non-working" partner or one who is not economically active, to be more accurate makes a valuable contribution to the family's financial wellbeing simply by undertaking such tasks as child care, cleaning, cooking, shopping, washing, ferrying children about etc. If the individual was no longer there, it may be necessary to pay someone else to perform the tasks. We all know the importance of life assurance & income protection but how much is enough?
Eg. a widowed parent earning £25,000 a year, might face a child care bill for one child averaging £720 a month, assuming a 48-week year; that is not far short of half their take-home pay of £1,561 a month. Of course, there is likely to be a substantial Working Tax Credit available (including child care element) under such circumstances. But child care is not the only financial challenge faced by a family when a parent dies, or is long-term incapacitated. Other "costs" can include:
- Extended support for children beyond normal school hours;
- Reduced principal income as remaining parent has to cut the hours worked to cope with children's personal and emotional needs;
- Additional expense for catering and home responsibilities.
In this case, substantial life assurance, perhaps including critical illness cover, may be required.
Of course, it is not just death that threatens a family's financial wellbeing.
A sustained period of ill health could not only reduce earnings capacity, but also increase living costs. Income protection insurance can go a long way towards helping cover the costs and is available for a wide range of occupations including for those who are not economically active but have caring responsibilities. It comes in a number of guises, including accident and sickness insurance (which offers an income as well as some lump sum benefits and is offered on an annual basis), permanent health insurance (which provides an income and is offered for a fixed number of years, even up to retirement and critical illness insurance, which pays a lump sum, rather than an income.
Private medical insurance can also not only provide for the cost of health care but can assist in a speedier recovery, as treatment is often faster so that a period of incapacity is shortened. This applies not just to those in work but also children, whose education could suffer during any sustained
period away from school.
To discuss any of these areas and a review of your families' requirements please contact Ian Bascombe on 0121 308 1152 or email info@squirrelgroup.co.uk quoting Family Time Magazine, or you can obtain further information at www.squirrelgroup.co.uk.
Written quotations available on request. All loans are subject to status. Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing any debts against your home.
Squirrel Financial Management Ltd is authorised and regulated by the Financial Services Authority. Registered in England and Wales No 03961335, Head Office and Registered Address: SQ2 House, 240b Lichfield Road, Four Oaks, Sutton Coldfield, West Midlands, B74 2UD.
