The best starting point for financial planning is to protect what you already have.  You don’t think twice about doing this for your property, your possessions and your car.  But what about you, your health and income?

How would your family cope if you died or were unable to work and your income ceased?  Could they pay the home loan and maintain a reasonable standard of living?

As with other areas of financial planning there are many different options and to determine which is right for you, you should seek professional advice from an independent financial adviser who looks at your whole financial picture.

Here are some of the options:

Level Term Assurance

This covers your life for a set period of time.  Term assurance is an inexpensive way of giving protection, providing a lump sum payable on death or a regular income to your dependants.


Decreasing Term Assurance

This is usually taken out in conjunction with a loan such as a ‘home loan’.  The amount you are covered for reduces over a period of time in line with the outstanding loan.


Endowments

Endowment policies pay out on maturity or if you die before the policy matures.  You determine the sum required and the premiums are fixed accordingly.  If you die, this amount plus profits if the underlying investment have performed well, is paid to your estate. If you survive, the proceeds are paid to you.

These policies can be used to repay a loan or simply as a savings plan.


Income Protection / Health Insurance

These can provide a regular income or help pay for treatment if you are unable to work through illness or an accident.  It is a way of enabling you and your family to help maintain your standard of living even if your salary ceases for a time.


Critical Illness

Life assurance pays out if you die during the policy term, but what happens if you suffer a serious illness such as cancer or a heart attack and you live?

Your income may come to an end or be drastically reduced yet you still need to provide for your family.

Critical illness policies pay out an agreed amount of money as a lump sum if you are diagnosed as suffering from a serious or life-threatening disease or if you are totally and permanently disabled.  It is payable even if you make a full recovery and can go back to work again.

This kind of policy can give you the extra bit of financial security that you need at this critical moment in your life.  It can help pay for treatment, extra childminding, a home help or a holiday to help you recuperate.  You could even pay off the home loan.  You could be entitled to state benefits but a cash lump sum gives an extra cushion of security at a critical time.