Personal Protection

background1

John and Fiona are 40 years old. They have two children Amelia & James (age 12 & 10).

John earns £35k p.a. working freelance in IT, whilst Fiona earns £30k p.a. as a Teacher. They are concerned about how they would manage financially if either of them couldn’t work due to long term illness. John is more worried because being self-employed, he doesn’t have any employer sick pay.

They also have a mortgage with an outstanding balance of £100k, over a 20 year term.

key client considerations2

Should the worse happen and either John or Fiona die, they want to know the mortgage would be repaid in full.

We went onto talk about serious illness and how this could also have a life changing impact.

Suffering a Heart Attack or being diagnosed with Cancer would mean being off work for a long period. This may also lead to reduced working hours, a change of career, or early retirement.

Having reviewed their income and expenditure we concluded that if either John or Fiona couldn’t work due to long term illness they would struggle financially.

approach3

After reviewing John and Fiona’s circumstances and insurance needs we explained the different types of policies available to them.

Having choice and flexibility was important to John and Fiona. We therefore recommended they take out a joint Life and Critical Illness policy to cover the mortgage. This would ensure the mortgage would be repaid should either suffer a serious illness or die. Royal London quoted £58.04 p.m. for the policy (just under £10 per week each).

We also recommended an Income Protection Insurance policy for Fiona with a 12 month deferred claim period. This ties in with when Fiona’s employer’s sick pay would cease. Royal London quoted a premium of £42.67 p.m. (just over £10 per week) to provide cover of £16,500 p.a.

We recommended the same policy for John, but with a shorter deferred claim period of 3 months.

We agreed they could use some of their savings to replace loss of income in the early months should John be unable to work. Royal London quoted a premium of £33.63 p.m. (just over £1 per day) to provide cover of £19,250 p.a.

outcomes4

John and Fiona were reassured to know their family was financially protected. Whether it was long term sickness, serious illness or sadly death, the family would have enough money to live comfortably.

We arranged the cover within the disposable income they had available at a cost of just £2.21 per day each (less than a Starbucks coffee).

We also recommended they speak to a local solicitor and draft a Will as soon as possible.

We agreed to review the policies every 2 years to ensure the cover continues to meet with their circumstances and needs.

Having a financial adviser means John and Fiona can get in touch to discuss any concerns they have in the future regarding their financial planning.

We have already agreed to sit down and look at pension options for John within the next 2 weeks.