Should you get a Single or Joint Life policy?

Wanting to secure your loved ones’ future is something we can all relate to. It’s common sense to want to ensure that should the worst happen, they will be financially covered to cover costs such as mortgage repayments, childcare and funeral expenses.

Making life cover part of your financial plan is a big step towards that peace of mind. But if you are married or co-habiting, you may be asking yourselves an obvious question: Is it better to get two single life policies or a joint policy together?

As a couple, it might be instinctive to opt for a joint policy. But when making such an important decision, there are other things to consider. Here is a quick guide to some of the key things you may like to think about before coming to see us to discuss the next step…

Joint Policy:

  • Covers two lives in just one policy
  • Joint policies tend to be cheaper
  • Payout is normally claimed upon the “first death” only, but can be set up as “second death” which pays out when both policyholders die
  • Joint cover may not be suitable in the event of separation or divorce
  • Joint policies are not normally written in Trust as the policy usually pays out to the surviving partner as a ‘transfer of assets between spouses’, which is exempt from Inheritance Tax
  • Terms consider both parties and therefore partners won’t get individual terms as part of a joint life insurance policy
  • If both parents died, children would only get one payout

Two Single Products:

  • Two separate policies covering two separate lives
  • Two single policies are likely to cost more
  • Payout can be claimed on both lives, which will ensure the surviving person is not left without life cover, which may have higher premiums due to age or changes in health
  • Easier to keep covered in the event of separation or divorce
  • Single life policies can both be written in Trust. This means each of you can decide where the money goes on each policy. This will also avoid probate and Inheritance Tax (IHT)
  • Can be tailored to each individual’s needs and terms will reflect each partner’s circumstances and health
  • In the event of death of both parents, the children would receive two payouts

Whether you opt for a single or a joint policy can be based on many factors, all of which we can go through together with you and your partner. It also a good idea to add some critical illness cover to your policy, as well as child’s critical illness cover where suitable. Contact us today to arrange a meeting to discuss your protection needs.

Beginner’s Guide to Income Protection

What is income protection?
Income protection, commonly known as IP can provide monthly tax-free payments that replace part of your income. These payments help ease any financial hardship if you’re not able to work.

The cover usually pays out until you are able to start working again or until the end of the benefit or policy term. You can claim multiple times during the term of your policy.

You can also take out budget income protection which usually costs less but the payment period is limited for each claim.

Why should you take out income protection?
In the UK nearly a million people find themselves unable to work because of serious illness or injury every year (ABI 2015).

If you become unable to work, would you cope by surviving on your savings, sick pay or on state support, which is currently as little as £57.90 a week? If not, it is likely you will require an alternative way to continue to pay your essential bills and it may be worthwhile considering income protection.

How much does income protection insurance cost?
The cost of a policy will vary depending on various factors such as:

  • Age – usually the older you are the more you will have to pay for income protection.
  • Job – you may be asked to provide details on your job. If your job involves extra risks such as working at heights it is likely that you will have a higher premium.
  • Occupation definition – if your policy covers your own occupation it means you will be covered if you have been declared medically unable to do your own job. If you want to pay a lower premium you could opt for any occupation which means you won’t be covered if you are still able to work in any job or suited occupation which means you will be covered if you can’t work in a job similar to yours.
  • Smoker status – some providers will want to know your smoker status, if you are a smoker you may have to pay a higher premium.
  • Health – if you are in good health, have a low BMI and no family history of health risks your premium should be more favourable. However, some providers don’t take health into consideration.
  • Income to be covered – the higher your salary, the more income protection will cost you each month.
  • Waiting period before the policy pays out – you generally set payments to start after your sick pay comes to an end. The longer the waiting period, the lower the monthly premiums.
  • Range of illnesses and injuries covered – generally the more the policy covers, the greater the premium will be.

Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income.

If you would like advice on taking out or reviewing your income protection policy then speak to one of our advisers today!

7 Great Reasons to Contact Your Adviser

1. Your circumstances have changed
In a very short time your circumstances can change significantly. Many life events can come and go without you considering the implications they could have on your mortgage or on your protection needs. If you think something may have changed that is of importance, such as marriage, having children, a change of job or even changes to your health, let us know so we can revisit your mortgage and protection options.

2. You aren’t fully protected
We want to make sure you are protected should the worst happen. If you didn’t take out any protection when you took out your mortgage it may be a good idea to revisit this decision. Your financial position may have also changed since you first took out your mortgage. This means you could now have more money in the budget to build on your existing cover or start protecting yourself, your family and your lifestyle.

3. You could be saving money on your mortgage
If your current mortgage deal is coming to an end you will automatically be transferred on to your lender’s standard variable rate. This means you may end up making higher monthly repayments. If you want to check you are not paying more than you need to on your mortgage, then we are here to help you.

4. You are considering investing in another property
There are many ways you can invest in property. If you are thinking of investing in a buy to let property, a holiday let or another property investment option, then give us a call and we will be able to advise you along the way.

5. You want to help your children buy their own home
If your children are now all grown up, they may be looking to fly the nest and purchase their very own property. We would love the opportunity to help them find the right mortgage. We can also give you advice on all the different ways you can help children take their first step onto the ladder.

6. To discuss the mortgage and protection market
The mortgage and protection market is constantly changing. We would be happy to discuss changes in the market that could affect your mortgage, protection or future plans.

7. You were declined for a mortgage in the past
You may have previously been declined for a mortgage. However, there are now many more specialist lenders available to us. This means we have more options to help those with complicated borrowing scenarios. So, if you have been declined in the past it doesn’t mean the door is shut forever!

Don’t forget you can refer your friends and family to us– we are always happy to help!