Life And Income Protection Insurance Broker

The Power of Life Insurance And Why You Might Just Need It

One of the most worrisome parts of having a family is their security in case of your untimely death. While other things may be managed with assistance from friends and extended family, it is very important to safeguard the financial security of your loved ones. This is where life insurance comes in as one of the strongest tools at your disposal.

What is life insurance?

Life insurance is a policy that will financially assist your dependents, partner or children, in case of your death. This is done either through a lumpsum payout or periodic payments of a pre-determined amount, depending on the type of insurance cover that you buy.

While this is the technical definition, we at Visionary Finance as expert life insurance brokers, believe that life insurance is more than that. It is not just another expense to add to your list, but a crucial requirement in the safety and well-being of your family. It is the financial fallback for your family which ensures that your loved ones don’t have to compromise on their quality of life or stop themselves from fulfilling their needs because you are not around them anymore.

Why is life insurance an important requirement?

The uncertainty of death can sometimes derail the plans of an individual for their family. They might have loans or mortgages to look after, future plans for savings and investments, plans to provide their children with better educational prospects or anything else. In case of an untimely death of such an individual, their plans for their loved ones may remain unfulfilled. Beyond that, families may also struggle with expenses on a day-to-day basis when an earning member passes away.

This can all be avoided by investing in the future of your family through life insurance. Even if you are not able to save money or make other investments right now, simply getting life insurance could make all the difference for your family. From funeral costs to mortgage payments to everyday expenses, the right life insurance policy can help your family with everything after you.

What Are The Benefits Of Life Insurance?

Life insurance is that safety net for you and your family that not only provides financial protection but also provides peace of mind. It is an investment towards your family’s future which will protect them from any potential financial hardships that may arise after you. Here are some reasons why it is crucial to have life insurance:

• Financial Stability - In the event of your passing, life insurance can become a source of stability and security for your family. It can replace lost income and ensure that your family doesn’t have to compromise with their lifestyle.
• Debt Repayment - Mortgages, credit card bills and other loans can pile up on your family in your absence. Life insurance can provide them with significant relief from all these dues without impacting their daily life.
• Educational Needs - After you, your children might find it difficult to get the quality education or training that they want due to financial issues. If you have life insurance, that payout can be used to fund any educational aspirations of your children.
• Business Assistance - If you are planning to pass on your business to your family members, your life insurance can also help them with it. It can help your family cover any business debts or even to keep the business operational.

This list is by no means exhaustive. There are many different things that the money of a life insurance payout could help them with. The crucial thing to remember here is that no matter what they use it for, having life insurance ensures that your family has a strong financial support system to rely on during a very difficult emotional time.

To ensure that you have opted for the appropriate insurance policy, it is always advisable to take assistance from a reliable life insurance broker in the UK. You need a life insurance policy that will provide your family with comprehensive coverage after you. The sum assured for such policies can vary based on different factors like income levels and premium amount. A trustworthy broker will help you navigate through all these things so that you can make the right decision.

How Does Life Insurance Work?

Life insurance is an investment tool where you pay a certain amount of premium on a periodic basis and if you pass away during the term of the policy, your dependents (as nominated by you) get a lump sum payout or a regular periodic payment. The terms and amounts for all these things are pre-determined in an agreement between you and your insurer before you start the policy cover. Here is a basic overview of how life insurance policies usually work:

• Policy Purchase - You are first required to purchase a life insurance policy from an insurance company to become an eligible policyholder. This will detail the terms of your coverage, primarily the “sum assured” or the total amount of payout that your family will receive, the premium amount to be paid by you and the term or duration of your policy.
• Payments of Premium - In order to continue your life coverage, you will have to make periodic payments to the insurance company as agreed upon in your policy. You can also opt for a cover which increases parallel to the inflation. This will increase the premium amount and the sum assured according to inflation in order to protect the value of your money.
• Duration of Coverage - Here you have two choices. You can either get term life insurance which would cover your life for a pre-defined period, usually 10-40 years. In the event of your passing during this term, your family will receive the insurance payout. Alternatively, you can get a whole life insurance plan where your entire life will be covered as long as you continue to pay the premiums.
• Policy Payout or Death Benefit - After you pass away and your nominee makes a claim for the same, they will receive the payout, which is the sum assured as per your policy plan. This payment is generally tax-free and can be used for any purpose like debt repayments, funeral costs, daily living expenses, etc.

Since there are multiple aspects to a life insurance policy, choosing the right plan may seem complicated. Taking assistance from a reputable broker is always recommended.

What Does An Income Protection Insurance Policy Cover?

Income protection insurance in the UK is specially designed for individuals who are the earning members of their respective families to provide financial assistance in the event that they are unable to continue working due to illness or injury. Income protection insurance provides you with an alternate income, which is usually a specified percentage of your pre-incapacity income, to fall back on when some health issues prevent you from working. This ensures that you and your family can manage your living expenses without having to use your savings or taking a loan.

Income protection insurance is a very important tool for individuals who wish to secure the financial stability of their families in the case of an unforeseen event.

Is income protection insurance important for me?

To answer this question, you first need to understand the benefits that your employer may be providing you with like sickness benefits or statutory sick pay. You should evaluate the value of your SSP and whether it is enough to cover your living expenses. Another aspect to consider is the duration of sickness benefits that your employer provides. If the duration or the amount is not enough as per your living expenses, then it is highly advisable to get income protection coverage.

What is included in income protection insurance?

The term or duration of your coverage, as well as, the amount you are covered for depends on the type of insurance policy you purchase. The primary goal of an income protection policy is to provide you with a portion of your lost income.

Income protection policies cover you for a wide range of physical and mental illnesses, injuries or disabilities that may prevent you from working. You should review the criteria of your insurer for incapacity before purchasing a plan.

With some income protection policies, you may also get access to some rehabilitation services. This includes treatments, therapies or vocational training that would assist your recovery and help you return to work.

It is very important to discuss the specific costs and benefits that your income protection policy entails with your financial advisor before making a purchase.

Types Of Income Protection Insurance

Different companies provide different income protection insurance policies that are designed to cater to various needs and preferences. Broadly speaking, the types of income protection insurance plans are as follows:

• Short-term Income Protection - This type of policy is usually beneficial if you get sick or injured and are unable to work for a short duration. In such a plan, you get coverage of around 1-2 years.
• Long-term Income Protection - This type of policy is beneficial in case you become terminally ill or permanently disabled. While it doesn’t cover unemployment, it does supply you with a regular and periodic income till you retire or till your policy ends.
• Accident and Sickness Cover - This type of insurance specifically aids individuals who are unable to work due to an illness or injury. It provides you with a monthly payout which will help cover your expenses till you can return to work.
• Unemployment Cover - This cover is meant for cases where you might lose your job due to layoffs, defaulting of the company or other reasons. This type of policy will provide you with payouts till you are able to get another job.
• Own Occupation Cover - This policy can be helpful if your health doesn’t allow you to work in your particular occupation, even if your condition isn’t debilitating.
• Suited Occupation Cover - In this type, you can only make a claim if you are unable to work in your particular occupation or even a similar occupation as per your qualifications.
• Any Occupation Cover - Here you can make a claim only if your medical condition is entirely debilitating. If your insurer decides that you can’t work in any occupation because of your condition, only then will you be entitled to a payout.

To find and purchase the best income protection insurance in the UK which is suited to your needs, it is always advisable to consult a financial advisor.

How Does Income Protection Insurance Work?

Income protection insurance is meant to be a safety net that will support you and your family with a regular source of alternate income if you are unable to work. It ensures that you can manage your financial responsibilities even if your health doesn’t permit you to work.

Here is a brief explanation of how income or salary protection insurance in the UK works:

• To begin with, you have to purchase an income protection insurance policy from a recognised provider. The policy will specify mutually agreed-upon terms of your premium amounts, payout amounts, etc.
• To ensure that your coverage is continued, you have to pay regular premiums to the insurance company as dictated by your policy.
• It is important to note that there is a waiting period or “deferred period” which is basically the time between your incapacity and the time from when you start getting the policy payout. The duration of this period can be chosen by you in accordance with the policy guideline.
• After the waiting period is over, you start receiving the policy payout. This amount is usually between 50-60% of your pre-incapacity earnings. The benefit payments are also usually tax-free.
• The benefit period or the maximum duration for which you are entitled to payouts is determined by the policy you purchase. If you are eligible for SSP (statutory sick pay), you can choose to start the benefit period after SSP ends. Even if you are able to return to work part-time, you can choose to get partial payouts from the insurance till you can start working full-time.
• The insurance company may ask you to undergo a medical assessment to confirm your incapacity to work. They may also ask for evidence and reports from your healthcare provider for the same.
• Some income protection policies may also offer rehabilitation support which includes treatments and vocational training which can aid your recovery.

This is an overview of how income protection insurance usually works. There may be specific costs and benefits to the policy that you choose that could be different from what is mentioned here. It is always important to carefully review all such terms and work with a qualified insurance advisor.

What You Need To Know Before You Take Out Income Protection Insurance

Before you purchase an income protection insurance policy, there are a few important factors that you need to consider so that you can pick the right policy for your needs.

• To start with, you should analyze your financial needs, including your expenses and any existing insurance coverage. The goal of this step is to determine the amount of payout you are expecting if and when you need to make a claim on your income protection policy.
• The second step is to understand the different types of income protection policies available in the market, like short-term or long-term policies. Here, you should choose a policy that aligns with your financial requirements, preferences and circumstances.
• Your insurance provider will also require you to select a deferred period which is the waiting period between your incapacity and the benefit payouts. You should consider your other savings and SSP, if any, to determine how long you can manage without the insurance payout.
• You also have to determine the benefit period for your policy. This can be a couple of years or until the time you retire, based on the type of coverage you choose.
• It is also important to understand the premium requirements. The duration of your benefit period and the amount of your insurance payout will significantly impact the amount of premium to be paid. Here you have to consider your affordability to make the right decision.
• You should also be aware of the exclusions and limitations, or in other words, the cases where your insurance may not provide coverage. For example, some insurance providers don’t provide coverage for pre-existing illnesses, while others do. Make sure to understand such situations carefully.
• Be mindful in understanding the definition of incapacity according to your insurance provider. This will tell you what illnesses, injuries or circumstances are eligible for the claim.
• You should also gather information about the renewals and cancellations of your policy. In case your financial circumstances change, you may want to renew or cancel your policy.

There are many factors that must be considered before purchasing a policy. It is best to do as much research beforehand as possible.

What You Must Tell Your Insurer Before You Take Out Income Protection Insurance

If you are applying for an income protection insurance policy, it is very important to share accurate and detailed information about various elements of your life with your insurer. Failing to disclose any information that is considered relevant can lead to problems when you make a claim. Here is what you should share with the insurance company before purchasing a policy:

• It is crucial to include a thorough account of your health information and medical history. This includes any existing conditions, surgeries, illnesses, treatments and/ or medications.
• You also have to share the details of your occupation and any occupational hazards it may entail. This can have an impact on the risk assessment of your application and premium calculation.
• You should disclose the details of your substance use. Details of your use of alcohol, cigarettes or anything else should be shared as it has an impact on the policy terms and premium amount.
• If you have any other insurance policies like life insurance or critical illness cover, it is best to inform your insurer about that. This will help them suggest a coverage plan for you that aligns with your overall financial protection.
• You should also share all relevant financial information such as other income sources, or debts and mortgages so that you can get the appropriate level of coverage.
• If there is a family history of a certain medical condition, like cancer or heart disease, it is important to include that as well. This information will impact your risk assessment.
• If there are any changes in health or circumstances between applying for a policy and its activation, it is best to update your insurer about it.

Providing honest and thorough information to your insurer will ascertain that you are provided with a policy that is suited to your needs and that your claim process if needed, will go smoothly.

In some cases, such as having a high-risk job or pre-existing medical conditions, an individual may not be able to get income protection insurance. If that happens to you, you can contact a recognized insurance broker to help you out. They usually have access to certain policy plans which are not available otherwise.

What Affects The Cost Of Income Protection Insurance?

Insurance providers consider many different factors when calculating the premium amount of an application. Here are some of the main factors that have an impact on the cost of income protection insurance:

• Age is a primary factor considered by insurance providers to calculate the premium amount. Younger people are perceived to have fewer health risks, making them eligible for a lower premium.
• Another important factor is the current health status of the individual. If you have any pre-existing condition or even a family history of major illnesses, your premiums might be higher than the average. This is because your health risks may increase the possibility of your incapacity in the future.
• An assessment is made of your occupation and any related hazards as well by your insurer. If your job has a higher risk or is very physically demanding, it may increase the cost of your insurance.
• If you have any substance use habits, they may also hike up your premium. Smoking and heavy drinking are linked to higher chances of health issues making them a significant factor in the calculation of your premium amount.
• The coverage amount that you are looking for has a direct impact on your premium amount. Higher the coverage amount, the higher the premium. It is important to note that in most cases, the coverage amount is a percentage of your current income. So, it can’t be equal to or higher than your income.
• Your choice of the duration of the deferred period or the period between your incapacity and when the benefit payments start also has an impact on your premium amount. If you are comfortable with a longer waiting period, you might have to pay less in premium amounts.
• If you take an occupation-specific coverage, your premium may be higher. This means that if any illness or injury incapacitates you from doing your own job, you can make a claim from the policy. If you take an ‘any occupation’ type of cover, your premium will be lower. But in this case, your illness or injury has to be completely debilitating and should prevent you from doing any job at all if you want to make a claim.

Cancelling Your Income Protection Policy

If you change your mind after purchasing an income protection policy, you can easily cancel it. The process is usually pretty straightforward and most insurance companies allow a 30-day cancellation period where you can avail full refund.

You should ideally ask your financial advisor or insurance broker beforehand about the cancellation policy. If you haven’t, then you can simply review your policy documents to understand the specific terms and conditions relating to cancellations. Here you will find information about any applicable fees or notice period requirements. You can review them to decide if you want to proceed with cancellation.

You can contact your insurance broker or your insurance provider to inform them of your decision to cancel the policy. They might ask you to fill out a cancellation form. Fill it out completely and accurately providing all the requested information. Here, you might also be asked about the reason for cancellation. Whatever the changes in your circumstances or financial planning may be, can be mentioned here for their review.

After you have submitted the form, the insurer may take a few days to review your application and to process the cancellation and refund. Once they have processed it at their end, you can expect your refund. Be sure to collect and retain the cancellation request and confirmation documents for your records.

It is important to note that you should consider your current financial and health situation before cancelling your policy. You might want to figure out an alternative way to safeguard your financial wellbeing in case you become unable to work. If the cost of insurance is an issue for you and you are looking to save on premiums, you can also explore other options. For example, you can adjust your coverage, benefits or waiting period to reduce premium than cancelling the policy altogether. You can contact your insurance broker for relevant advice before making a decision.

Whether you are looking for life insurance or income protection insurance or any other type of insurance or financial services, you can contact our experts at Visionary Finance. With us, you can be sure to get reliable and profitable assistance that is suited to your needs.