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One of the most common questions we see when we consider the situation for new customers is that over the years have been sold (or bought) many lives, Critical Illness and incomes policies.
Well of course it is important that such coverage, for example, a couple with a family and a mortgage is absolutely essential. And 'perhaps better, have' a bit "too much coverage, rather than a shortage, with serious problems if it was the worst case isCould happen.
However, it is also fair to say that probably is not that you would be happy to pay well over the odds for protection from year to year if it turns out that they do not need.
In many cases turns out to be the case, more particularly for clients aged between 45/50. This is because in almost every instance we think is questionable, many things happen that will protect instead.
The top few would be:
The policy itself is not "Best Value"
The client wasoverinsured beginning
The questions have not been revised for many years
NHS services have not been incorporated in the calculation of the deficit
I think the first three are obvious, but a look at the fourth edition here. Perhaps it would be appropriate to consider some examples of medical officer. In both cases, we assume that I am married with 2 children and have a mortgage.
We look at the life insurance and income protection only here, the numbers we use areis for illustration only.
Terminology
Term Assurance (TA) - lump sum life cover over a number of years.
Household Income Benefit (FIB) - the years of life cover monthly income over a certain number.
Permanent Health Cover (PHI) - monthly, taxation, income replacement usually 60 years.
These examples show that the NHS offers those services automatically, depending superannuable salary and length of service. If youbought, years, then this coverage will be further increased.
David to 40 years
He has 16 years in the NHS with a current salary of £ 100k pa Children 8 and 10 years and are likely to go to college. The debt is at its peak, and takes much of the monthly budget.
David has sold more life insurance, PHI and a plan costs, £ 100 per month total. When asked, David can not remember how the NHS benefits, saidalready.
Then cover, what would David NHS? Here we use only the minimum required to be received by the NHS if approved, how long to work or even die. This means, with Tier 1 benefits when calculating.
Death benefit - £ 200,000
The income is paid for the death of 20,000 - € pa
Income is paid for life on disability - £ 20,000 pa
These are very large sums, and if we understand what really amount to cover DavidNeeds, sometimes you can save.
Tom age 50
Tom has 26 years of service in the NHS, with a current salary of £ 110,000 per year, as some points of discretion. Children aged 20-22 are close to leaving the university, and the mortgage is much less. Its full protection not be monitored for 5 years has been, and he pays £ 140 Clock for its protection measures.
Tom's NHS benefits are:
Death benefit - £ 220,000
Income is paid on death- £ 35,750 pa
Income is paid for life on disability - £ 35,750 pa
As you can see, these benefits are higher, but the most important issue here is that reducing the protection needs Tom. But when these policies were purchased many years ago, is too easy to forget that they too irrelevant to their needs.
Results for GVP or GDP will be similar.
Of course, some policies have been designed by this time finished, but some go for manyYears. It must be made in this type of scenario in which a considerable saving in the rule.
Whether you are a financial adviser or a traditional fee-based planner (or Do It Yourself) you need a deficit to make the calculation and covers all existing benefits including the NHS.
Other tips are:
Removal of living together rather than each does not cost much more, and "double" your coverage as a couple (this also means that the survivors have their own area of coverage)
If youcritical illness and life cover to buy, be sure to compare both plans, combined, can be very cost-
ensure that all life is written in trust to cover planning, for help in inheritance tax
If you have Wills they write. If not now act Wills
sense for their enduring Powers of Attorney
Remember, every 1 € will not need to actions that you saved can be spent on what you really need.
Financial TipsBottom Line
It 'important that you know:
That you and your family will need in case of disaster
what you have right now, including the NHS benefits. If you are unsure about your NHS benefits, write, including the NI number and date of birth.
NHS Business Authority, Hesketh House, 200-220 Broadway, Fleetwood, Lancashire. FY7 8LG. Telephone 01253 774774 °
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