The life insurance advice you receive needs to consider all of your circumstances. It is not usually enough to trawl the internet and choose the latest site offering the ‘cheapest life cover’ quotes – they will often not take any details of your circumstances and will give you only what you ask for. Many of the cheapest insurance plans will not make entirely clear that their premiums are reviewable and can rise later, meaning they are not the cheapest in the longer term.
A good adviser giving you life insurance advice such as Andy Wilson will consider the following questions:
- Who needs to be protected financially if you die?
- How much cover do you need? What debts do you have? What is your income? What other life cover do you already have? How long does it last? How long do you need the new benefits to last and why?
- Who will actually receive the plan benefits if you die? Should they own the plan that you are insured under (they will need to have an ‘insurable interest’ in your life)? If the benefits are to go to young children should they be placed in a flexible Trust arrangement until they are old enough to manage the money themselves? If so, who do you appoint as Trustees?
- What if you don’t die but you are too poorly to work? Life cover won’t pay out unless you are dead or, in some cases with a ‘terminal illness benefit’, you are about to die! Income protection may be needed.
- Do you need flexible cover that can adapt as your life changes? Some plans offer the addition and removal of covers plus flexibility to change sums insured.
- Does cover need to be inflation proofed by index linking?
- Have you already been ill? Some illnesses will cause cover to be declined, or the premium increased (‘loaded’) to cover the additional risk of a claim.
- What is your lifestyle? Do you have potentially dangerous hobbies? Do you travel overseas a lot with your job? Do you drive a lot? Are you the perfect weight but just not tall enough – or put another way, a rather large body mass index?
- What is your budget? It is no use being advised to take a range of cover if you simply cannot afford it.
Businesses have their own special needs for life assurance.
- Protecting shareholding Directors: if a shareholder dies and passes their shares to a beneficiary it is likely the remaining shareholders will not want these shares to get into the hands of a competitor or other ‘undesirable’. Insurance can be arranged to buy the shares from the estate and keep them within the business
- Protecting Business Partners: as above but for non-limited company business owners
- Protection for ‘Keypersons’ – the loss of key employees can have a devastating effect on production and profitability. Insurance can help to recruit new key staff and bridge the financial loss of the deceased workers contribution.
- Death in service protection: many businesses now offer simple life cover whilst someone works for them under a staff benefits scheme
Once Andy has been able to gather your circumstances together he is much better placed to give you the correct life insurance advice.
See here for details of the types of life assurance plans that can be arranged.