The recent plane crash tragedy has once again reminded us that we have little control over external events, that bad things do happen, and that unfortunately we may never know when our number’s coming up…..
From a financial planning point of view, the best thing we can do is to ensure that our family is provided for if we are no longer around for them, so that at least they have no money worries and can maintain their standard of living, whilst they come to terms with a changed future. In this scenario, being able to stay in the family home may be very important, so having life assurance that pays off the mortgage immediately if one of you dies is essential. But what about money to live on ? If you have children who are very young, they may be financially dependent for many many years to come. So having additional life cover that can provide either a lump sum or a monthly income until your children are old enough to be financially independent (if ever!) is important.
If you are employed, you may be fortunate enough to have an employee benefit called “death in service”, but also any pension plan you have – whatever your employment status now – has an in-built form of life cover. In the event of your death, either the value of the fund will be returned tax-free and / or an income will be provided for your surviving spouse and sometimes children, depending on the scheme rules.
This is why it’s important to work with a financial planner, to properly assess the provision you already have in place, and then to determine how long these funds would last, based on your monthly outgoings. Sometimes a sum of money can sound huge, but if it needs to support several people in the family for another 10 or 20 years, then it may reduce quickly and not actually be sufficient. For example, £200,000 in a bank account (I.e. not invested) would only last 4 years if you have monthly expenditure of £4,000.
Life cover is inexpensive compared to other forms of protection, and the younger you are when you take out a policy, the cheaper it will be.
It does involve underwriting, so your health, existing medical conditions as well as your age are taken into account when calculating your monthly premium to pay, but it’s usually a straightforward process that your financial planner will manage through the application process.
So, please take stock of your current situation, and work with a financial planner to ensure that your family are fully protected in the event of a tragedy.
And it goes without saying (but I’ll say it anyway!), make sure you have an up-to-date Will in place, and if you have children, that you have nominated guardians to look after them if you are no longer there to do it yourself.
In the words of Jerry Springer, “take care of yourself, and each other”.
To receive a complimentary guide covering Wealth Management, Retirement Planning or Inheritance Tax Planning, please contact Amanda Redman on 07801 045587, email [email protected] or visit www.amandaredmanfp.co.uk