Protection planning is the cornerstone of a sound financial plan and addressing a client’s life cover, critical illness, income protection and private medical needs must be of paramount importance before progressing onto other financial planning matters.
Having recently met clients with existing protection policies, it seems clear to us that on many occasions Protection policies have been put in place to clear the main debts – most notably the mortgage for many people. This is great in theory as we are sure many clients would gain a great deal of comfort knowing that their main debt is cleared on should the unthinkable happen however, we think we’re duty bound to probe further.
The 2.4 Family Example
A young couple with two children…… if one of the spouses has passed away or indeed suffered a critical illness then yes, the main debt has been cleared although, it is most likely that an income has been lost and what if it happens to be the main income in the household?
An old colleague was an advocate of a Protection Plan that can provide the solution to this issue – Family Income Benefit plan. It is essentially life cover however, the benefit can be paid in installments, for example monthly and as such it looks more like an income rather than the traditional term assurance plan which will pay a lump sum up front.
So, taking this example, it is of course great advice to have a plan in place to clear the mortgage on death/critical illness. However the beauty of the family income benefit has is in the form of a level of assurance that the income can also be replaced so that a standard of living can be maintained. The result…… peace of mind achieved for you and protection for all the people that matter.