Life Insurance: Financial Advice with Kevin Clancy

Life Insurance Financial Advice Kevin Clancy

I recently heard someone say that protecting one’s life is an unnecessary and costly expense. My reply would be to ask oneself the following questions.

• What would happen to my spouse and family if I were to die?

• Would my loans and debts be paid off and, if not, to whom would it fall to clear them?

• If I have a business would it also expire after me?

The answer to these questions should determine the need for basic Life Protection.

Life Protection is not as expensive as many imagine. It can be the same as the cost of a daily cup of coffee from your regular coffee shop or two pints of beer a week could help provide the necessary protection.

Winston Churchill famously stated that the most important act anyone could take was to take out life insurance when he said: “If I had my way, I would write the word ‘insure’ upon the door of every cottage and upon the blotting book of every public man, because I am convinced, for sacrifices so small, families and estates can be protected against catastrophes which would otherwise smash them up forever.

“It is the duty to arrest the ghastly waste, not merely of human happiness, but national health and strength, which follows when, through the death of the breadwinner, the frail boat in which the family are embarked, founders and the women and children and the estates are left to struggle in the dark waters of a friendless world.”

In determining the correct type of cover cost is a factor. There is often really no need for Whole of Life cover as the need to protect one’s family and/or business will not be as great in later years as in the early years when loans still exist and/or the family is young.

Simple term assurance to protect the family needs only be taken to cover children up and until they finish full time education or until your financial responsibility ceases.

Life cover to protect a repayment mortgage can be even cheaper by taking out decreasing term assurance, as the loan reduces over its term so too does the sum assured in line with the reducing loan amount.

Protection

In seeking to protect the family, a very cost-effective form of cover is Family Benefit Assurance which does not pay out a lump sum but instead pays out a monthly income based on the overall sum assured until the policy term ends.

This income is tax free.

This form of protection is the most cost-effective for protecting the family and has the added benefit of not having to have the sum assured invested in order to have income paid out.

When looking at who should be insured it is worthwhile to not just look at the main breadwinner but also at the non-working spouse.

The main breadwinner may have to either give up work, work fewer hours or pay for home help should anything happen to their spouse.

It is possible to obtain quotes from online sources but then no advice is given. A qualified, regulated advisor can go through the thought processes regarding the sum assured and terms of the policy required as well as the need to put the policy in trust will be beneficial.

Do not just see the premiums as a cost and look instead at the possible cost of not taking out some form of Life Protection.


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