Smart Money Secrets protecting those that matter

Protecting those that matter

By Michael Duale, Principal of MD Wealth Management

Few people find life assurance, critical illness plans and income protection attractive! Unlike a mortgage, investment or pension, there’s nothing aspirational about these household expenses that help to safeguard you and your family financially against a serious illness or death. It’s all too easy to bury your head in the sand and think it will never happen to you, that you can’t afford it, or that your employer will look after you. There are two distinctive types of life assurance and both pay out lump sums on your death – ‘term insurance', which provides cover over a pre-determined period, and ‘whole of life’, which continues until you die. When choosing, it’s important to consider who you’re providing life assurance for, and why, how much is needed and for how long. Check also whether your employer provides a death in service benefit that reduces the need for extra cover. If you want to provide security for your family in the event of your death with a term insurance contract, it may be worth considering ‘family income benefit’ as an alternative. This pays out a regular income until the end of a specified period, rather than a lump sum, and may cost less than you think. Critical illness cover (CIC) pays out a lump sum if you contract any of a specified range of 40 to 50 illnesses and conditions, but these can vary considerably, making it hard to compare like with like. CIC can be sold as an extension to life assurance, or established as a standalone product, depending on personal circumstances. Income protection, which provides a specified level of regular income if you become unable to work due to sickness or disability, is usually the most expensive choice as it’s most likely to be called upon. It’s also one of the most under-utilised options –because people incorrectly believe they are already covered by their employer in the case of prolonged ill-health. When prioritising protection, you are probably more likely to need income protection than critical illness, and more likely to need critical illness than life assurance. A survey by the Financial Conduct Authority in October 2017 revealed that just under onethird of the UK adult population has ‘low financial resilience to the risk of death, critical illness or long-term sickness'. Cover becomes cheaper, for example, if you are prepared to extend the period of time before the replacement income kicks in. Short-term income protection contracts that pay out for between two and four years offer another relatively affordable solution. At MD Wealth Management we believe that our ability to tailor solutions to an individual’s needs and attitude, coupled with access to a carefully selected protection panel, can help provide an important financial safety net for your family.

To contact Michael call 01379 415511 or go to www.md-wealthmanagement.co.uk

MD Wealth Management Ltd is an Appointed Representative of and represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group's wealth management products and services, more details of which are set out on the group's website www.sjp.co.uk/products. The 'St. James's Place Partnership' and the titles 'Partner' and 'Partner Practice' are marketing terms used to describe St. James's Place representatives