Protecting your loved ones
With the current COVID-19 situation and the lockdowns that come with it, protecting your loved ones is more important now than ever.
The lockdown has been a time for people to realise how important our loved ones are with many reflecting on what they can do to protect the individuals close to them.
We have therefore created a simple checklist to help you with this:
Have life cover in place to cover liabilities
You should consider ensuring you have relevant protection in place to cover liabilities in the event of death for example a mortgage. Life insurance would be in place to protect your loved ones and pay off the outstanding mortgage. Not only will it will clear the debt but it will also not be a burden on the family to pay the mortgage, for example.
Cover your income
You may also wish to consider how you would continue to generate an income if unable to work due to sickness or injury. An Income Protection policy can help to continue providing this should you be unable to work for a set period of time.
Review existing policies
With an increasing number of employers providing employee benefits such as Group Death In Service or Group Income Protection, you may find that you have some cover in place already which may be of assistance to you or your loved ones, also meaning that less cover may need to be privately obtained.
However, if leaving an employer providing these benefits, please do review to ensure you remain sufficiently covered.
It can be worth regularly reviewing your existing policies too to ensure the level of cover remains sufficiently for any change in circumstances over time.
Make sure you know what additional benefits you may have
From a recent survey by Aviva they found that only 1 in 10 people knew what additional benefits came with their insurance policy. Insurance companies want clients to see insurance policies as more than just a direct debit or policy document in the drawer. There are additional benefits available, some at no extra cost which are available for the family too. So it is definitely worth reviewing your policy documents.
Prepare Lasting Powers of Attorney
Whatever your age, a sudden change in your health can have a significant impact on your loved ones and business partners. A well drafted LPA will provide those around you with the tools to ensure the standard of living for you and your family is maintained. This might include access to your savings and investments, managing a business on your behalf, or carrying out your previously agreed wishes for care and medical treatment.
Ensure your Will is up to date
The easiest way to protect your loved ones in the event of your death is to make a Will. Sadly, it is estimated that around 70% of people still do not have a Will which puts many families at risk of having to navigate a more complicated administration process at what is likely to be a very difficult time.
Not only does a Will provide your loved ones with guidance and certainty as to your wishes which can act as a real comfort to grieving families, but it is also an excellent vehicle for Inheritance Tax (IHT) planning. Undertaking Inheritance Tax planning now could mean your estate has a smaller IHT bill on your death, leaving more of your assets available for your loved ones.
Wills can also be used to create trusts on your death. Will trusts have many purposes and can be used to safeguard your home, attract certain tax benefits, and protect your family by giving them the flexibility to plan and provide for the loved ones who are most in need at the time of your death.
Death benefit nominations
It is important to note that pensions do not form part of your estate and is therefore not reflected in the content of your Will. Having a nomination in place provides the trustees/administrators of the pension guidance as to who you would like your pension to be passed to on your death. The trustees have the ultimate decision but with a nomination in place this will help the trustees decide.
Life insurance and Group Death In Service should also provide you with facilities to make a nomination as to who you wish any benefit to be paid upon event of death.
Like your Will, you should review your nomination on a regular basis including when circumstances change.
To ensure your loved ones are sufficiently protected please contact our Financial Planning or Legal Services team on +44 (0)1227 768231 or provide your details on our online enquiry form.
The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice. You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation. Kreston Reeves Financial Planning Limited, Independent Financial Advisers. Authorised and regulated by the Financial Conduct Authority.
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