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Insurance Protection

How much does your client need in monthly income?

  • What is their average monthly expenditure, including any annually or periodically paid costs?
  • What about any outstanding debts and loan repayments?
  • Do they have money set aside for unexpected expenses?

How would their ability to repay be affected by a loss of income?

  • Your client should include both individual and joint debts.
  • They should consider secured loans such as car finance, mortgage repayments and household goods as well as unsecured loans.
  • Family members may become liable to repay outstanding debts.

What would happen if they suddenly lost their job?

  • Your client should think about what lifestyle adjustments would be required, e.g. entertainment and leisure costs.
  • Would they still be able to pay school and further education fees?
  • What further impact would there be on any dependants they may have, for example caring for elderly parents?
  • What employee benefits would be lost? For example; company car, or private health insurance.
  • 60% of middle income working households would see their income fall by one third if the main earner was unable to work. 40% would see it fall by more than half.

Do they have a backup plan in case of redundancy?

  • BBetween October and December of 2017, 107,000 people were made redundant.
  • What savings does your client have, and how long would these last in covering household expenses?
  • Could they access funds from any investments?
  • Would family members be able to provide support until your client found another job?
  • Voluntary redundancies are usually not covered by unemployment insurance policies, and most won’t start until 3 months after job loss.
  • Some insurers will also protect the value of employment benefits, such as a company car or private health insurance.

Does your client rely on a job for their monthly income?

  • One million workers a year suddenly find themselves unable to work due to a serious illness or injury. Around 250,000 each year leave employment completely due to ill health.
  • Is your client self-employed? How would their business fare in their absence?
  • Women account for half the UK workforce, but over 50% have not taken out individual protection.
  • What other income sources do they have, if any?
  • Do they need to be fit and healthy in order to keep benefitting from these other income sources?

Does their employer provide support for short-term illness?

  • Employers are required to pay Statutory Sick Pay, but only for up to 28 weeks. It’s worth around £89.35 per week.
  • Only 43% of employers offer sick pay provision over and above the statutory requirement.
  • Your client can claim Statutory Sick Pay if they’re employed but unable to work and if their earnings have accrued above £113 a week for at least two months.

How would your client’s finances be affected by critical illness?

  • 50% of those diagnosed with cancer in England and Wales live for more than ten years afterward.
  • If an employee is unable to return to work after 28 weeks, they can apply for Employment and Support Allowance (ESA), which is around £70 per week for the first 13 weeks.
  • Only 33% of ESA claims are accepted.
  • Critical illness policies generally pay out once and conclude immediately afterward.

What provisions have been made in the event of their death?

  • Whole-of-life vs. term-life insurance policies – the former guarantees a payout, but premiums are more expensive.
  • If a joint life policy is appropriate, would it pay out on the first or second death?
  • Do they have mortgage protection to ensure that family members don’t lose their home?
  • Some life insurance policies also pay out upon terminal illness diagnosis.
  • Exclusions can apply to life policies, e.g. death due to drug or alcohol abuse, or existing illnesses.

If seriously ill, how would your client support themselves long-term?

  • According to Cancer Research UK, 50% of people born after 1960 will be diagnosed with cancer at some point in their lives.
  • Nearly 990 new cases of cancer are diagnosed everyday.
  • How would your client meet mortgage obligations if they became critically ill?
  • Would they be able to continue paying car finance or other secured loans?
  • Could savings and investments such as savings accounts, ISAs, and any stocks, shares or bonds be relied upon for the rest of their life?

Does your client’s employer offer a ‘death in service’ package?

  • Death in service packages normally pay between 2 and 5 times an employee’s current salary.
  • Some packages can be linked to an employee’s pension scheme, so employees may only receive a payout if they are signed up to the workplace pension scheme.
  • A payout cannot be assigned to a mortgage, but could be used to help with monthly payments.
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