There are many different ways of putting in place family protection, depending on exactly what it is that you are trying to protect.  If you are looking at protecting an individual in the event they were to pass away, then a life cover benefit would be the most appropriate.  If you wish to protect an individual’s salary, then an income protection benefit would fit best.

Below is a list of policies that are available that can be put in place to provide family protection and a brief description of what it is each benefit is trying to protect:

• • Mortgage Protection:  This cover is required by banks to be put in place before a mortgage can be drawn down.  It is designed to clear the balance of the mortgage in the event the individual covered on the policy passes away
  • Life Term Assurance: This type of cover will pay out a lump sum benefit to the deceased person’s estate once the death happens within the term of the policy.  The money can be used to help maintain a reasonable standard of living for their family
  • Serious Illness Protection: This cover provides the life assured with a lump sum payment in the event of being diagnosed with certain serious illnesses (terms & conditions apply) during the term of the policy.  This benefit could be used to pay down mortgage debt, medical expenses, time off work etc
  • Income Protection:  This cover protects a portion (maximum of 75%) of your salary in the event that you are unable to work due to accident or illness. Unlike other protection policies Income Protection pays you a monthly benefit rather than a once off lump sum and it is taxable.  Most people don’t think of their income as an asset, despite the fact that it pays for everything – the mortgage, bills, children’s education, insurance and all other lifestyle expenses. One major advantage this type of product has is that the premiums qualify for tax relief at the individual’s marginal rate (20% or 40% currently) if it is a personal policy or at the corporate tax rate (12.5%) if paid by a company
  • Pension Term Assurance:  This is a life cover benefit which pays out a cash lump sum on death.  This is effected through a personal or executive pension plan and the premiums qualify for tax relief at an individual’s marginal tax rate (20% or 40% currently) or at the corporate tax rate (12.5% currently) on the premiums

The financial effect an untimely death can have on a family is huge, especially if it happens to the main earner of the family.  The most financially burdensome years for a lot of families is generally when they are raising a family.  Therefore, it is vitally important to put in place adequate life & serious illness cover to protect against this unfortunate but very real danger to a family.

We at Summit Life & Pensions are able to work with clients to help them to identify and calculate what their benefit amount should be.  Affordability is obviously of great importance but we would always recommend to clients that part solution to a potential problem is better than not having any solution in place at all.