Protecting what’s important to you this Christmas

Published by Terry Burgum on 3 December 2019

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It’s not just under the tree that matters…

With Christmas approaching, you may be looking forward to spending some quality time with family and friends.

This makes it the perfect opportunity to consider how you continue to protect those nearest and dearest to you in the event that you are no longer able to do so yourself.

If you are self-employed, it is unlikely that you will be entitled to sick pay and death-in-service life cover, as an employee may be. By having the right insurance policies in place, you can ensure that you and your family are financially safe in all eventualities.

Protecting your family – Life insurance is designed to provide your nominated beneficiaries with a cash lump sum upon your death and can give you the reassurance that they will still be financially secure. With mortgage repayments typically being the single biggest financial commitment for individuals and families each month, it is surprising that an incredibly high 42% of UK mortgage holders do not have any life insurance in place. This would make it likely that your spouse or children would be inheriting the outstanding liability.

Whilst you should always ensure that you have adequate life cover to redeem any outstanding financial liabilities, it can be sensible to also consider covering some, or all of your household expenditure, hopefully making it a little bit easier for your family to adjust to life without you.

Tax efficiency – For company directors and high earning employees, a relevant life insurance policy may be of particular interest. Most company death-in-service arrangements are written using pension legislation and this can have a negative effect on death if other substantial pension values are held. By using a relevant life policy, this can avoid the pay-out being assessed against the Lifetime Allowance and thus an individual’s estate paying unnecessary tax at what would already be a difficult time for your family.

Protecting your income – The loss of income from being unable to work due to sickness or injury would be likely to have a significant impact on most households.

However, through an income protection policy, you can still achieve a percentage of your normal earnings as a regular monthly income. Dependent on the policy terms, this would continue to be paid for either a set period of time, or until you are able to return to work. This can ensure that you and your dependants maintain financial security.

For expert advice on ensuring you have adequately protected what matters the most to you please contact Kreston Reeves Financial Planning for a discussion on +44 (0)330 124 1399.

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