PLANNING FOR THE UNEXPECTED

You know more than most that life is unpredictable and can throw up nasty surprises.  Despite everything, nobody likes to think about the repercussions of serious illness or death.  Yet it’s your loved ones who will have to cope with the burden in such circumstances.  So, it’s important to make sufficient provisions in case the worst should happen.

A quick guide to protection cover

There are three main types of personal protection cover designed to offer you and your dependants security in the event of death, illness or accidental injury.  They operate as follows:

Life cover

This form of cover provides the security that your dependants will be financially provided for should you pass away.  The options include a capital sum to pay off your mortgage and any other debts, a rainy day fund in case of emergencies and a regular income for your dependants.

There are two main types of life cover:

• Decreasing - which decreases in line with your outstanding mortgage capital.

• Level - where the benefit remains the same throughout.

Critical illness cover

This provides protection against the financial implications of major illness (eg heart attack, cancer, stroke, Multiple Sclerosis*). It can allow you to clear your mortgage and other significant debts, adjust your lifestyle (eg shorter working hours) and adapt your home.

Again, there are two main types of cover – Level and Decreasing. These can be implemented on their own or combined with life cover.  For example, decreasing cover can be arranged so that your mortgage** is paid off on death or critical illness.

Income protection cover

As the name suggests this provides you with an income if you are unable to work due to illness or accidental injury*.

There are two types of income protection cover:

• Level benefit - which provides a level income throughout the allotted period.

• Increasing benefit - which increases each year to meet the cost of living.

*The types of illnesses and injuries covered may vary between insurers and include some exclusions. For more information you should seek specialist advice from one of our financial advisors.

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