You can’t predict a critical illness, but you can make sure you and your family are financially protected. A critical illness policy will pay out a lump sum upon diagnosis of a condition defined in your policy. This money can be used to cover your outstanding mortgage whilst you take time off work, pay for any alterations needed to your home in order to accommodate your condition or even a once in a lifetime holiday. Children’s cover is often also included in a Critical Illness policy, which covers the little ones too!
Level Life Assurance
If you die during you chosen term, the insurer will pay your estate a tax-free lump sum. The money could be used to pay off the mortgage, and help to protect your family’s financial future, leaving them with one less thing to worry about if you are no longer around.
You can opt to have Life and/or critical Illness cover decrease in line with your mortgage, or remain level throughout the term of your mortgage and hence leave a surplus cover in the event of death.
Whole of Life
This is more expensive than term insurance because a claim is inevitable. You should therefore compare prices and make sure you can meet the cost – and remember that you could be paying the premiums into your 70s and 80s. Whole of life insurance is often written on a second death basis to help a couple protect against inheritance tax for their children.
Everyone looks forward to payday and deciding how they’re going to spend hard earned money. But what if payday stopped? How would you pay all your outgoings and keep the roof over your head? An income protection policy pays you every month if you can’t work due to an injury or illness (the most common claims on income protection are for back problems, and depression/anxiety). You can spend the money on anything you want, and unlike earnings, it’s paid to you tax-free.
Inheritance Tax Planning
“Two things in life are certain, death and taxes”
- Mark Twain
Inheritance Tax is currently payable on the value of the estate that exceeds the NIL rate band, which is subject to annual indexation. Estates above the NIL rate band of £325,000 (tax year 2015/16) is taxed at 40%, 36% where at least 10% of the net estate is left to charity. People who have been widowed will also benefit by being able to use any unused portion of their deceased partner’s allowance when they die. So if all the estate was left to a surviving spouse, for which there is no IHT payable, that surviving partner will have the whole £650,000 allowance.
No matter your net worth, it’s important to have a basic estate plan in place. This ensures that your family and financial goals are met after you die. An estate plan will have several elements such as having a will, assignment of power of attorney.
Inheritance Tax Planning
Everyone should make a Will and a Lasting Power of Attorney.
The Financial Conduct Authority does not regulate Wills and Lasting Power of Attorney.
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