Protection

Protection is the generic term given to products that pay a lump sum or income in the event of certain situations. Most of us have insurance cover for our houses and vehicles but it is also important to consider something at least as important, insurance cover to protect you and your family.

We have set out below questions that we often get asked and details of the different types of products that may be appropriate.

If you would like to arrange an appointment to see one of our advisers, please click here or contact Richard Ludlow on (01780) 764145 or Tim Barker on (01205) 351114.


I want to ensure that my family has enough money if I die. How can I do this?

• Term Assurance
• Whole of Life

I would like to protect my income if I am unable to work. How can I do this

• Income Protection (also known as Permanent Health Insurance)
• Critical Illness cover

I would like to ensure that my mortgage is paid off if I die. How can I do this?

• Mortgage Term Assurance

I would like my family to receive an income if I die. How can I do this?

• Family Income Protection Insurance

Term Assurance

This is a no frills life policy that simply pays out a specified lump sum if you die during the term of the policy. This is the one of the cheapest forms of life assurance. Claims are settled tax free. There is no investment element and so if the policy is cancelled at any time the policy does not have a surrender value.
It is possible to get premiums that are reviewable and premiums that are guaranteed. We recommend guaranteed premiums because the premiums will then remain the same for the entire duration of the policy.

Whole of Life

This is a life policy which is designed to provide life cover for the rest of your life, ie no fixed term. It contains an investment element and the premiums are generally fixed for a specified period, typically 10 years and then reviewed. The future premiums are based on the investment performance of the policy. If the policy is cancelled early there may be a surrender value although you should not treat this type of product as an investment. Whole of Life is more expensive than Term Assurance but it can be a suitable option in certain situations such as inheritance tax planning or for those who wish to ensure that life cover is available throughout their lifetime. Claims are settled tax free.
You should note that Whole of Life polices which offer the cheapest premiums are not necessarily the most appropriate. Cheaper premiums now usually result in more expensive premiums at the review dates because less money is being used to fund the investment element which is designed to keep premiums down in the future. Please also note that these types of policy are often written in trust to avoid inheritance tax.
This is a more sophisticated type of life policy and we would recommend that you seek advice before setting up a new policy.

Income Protection (also known as Permanent Health Insurance)

This type of policy provides an income if you are unable to work because of an accident, sickness or injury. The level of cover is usually limited to 50%-60% of your income but claims are paid tax free. There is a deferment period before any claims are paid which you choose at the outset. This is usually anything from 4 weeks to 6 months. The longer the deferred period you choose, the cheaper the premium. In particular, this type of cover should be considered by those who are self-employed and employees who do not receive long term benefits from their employer if they are off work for a long period of time.

Critical Illness cover

Critical Illness cover is designed to pay out a lump sum if you suffer a defined critical illness such as cancer, heart attack or stroke. Claims are settled tax free. It could be used to pay off a mortgage or other debts or to pay for any special needs that might become necessary.

Mortgage Term Assurance

This is a special type of Term Assurance designed for repayment mortgages. The amount owing under a repayment mortgage reduces over the term of the mortgage and Mortgage Term Assurance is designed to decrease alongside the mortgage. It is effectively a decreasing policy because the amount the Insurance Company would have to pay reduces over the term. Premiums are therefore cheaper than ordinary Term Assurance. Claims are settled tax free.

Family Income Protection Insurance

This too is a special type of Term Assurance. Rather than paying out a lump sum, it will pay out an income for the remainder of the policy term if you die during the period of the policy. The income is tax free. Again, it is effectively a decreasing type of life cover because the amount the Insurance Company would have to pay out reduces over the policy term.


The above list is by no means comprehensive. We are always happy to provide specific advice based on your own personal circumstances.

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