Spectrum Financial Advice Guide to Personal Protection Insurance

What is Personal Protection Insurance, who should have it and why? Learn everything you need to know in our complete guide to Personal Protection Insurance UK.

Contents

• Spectrum FA Guide to Personal Protection Insurance
• Types of Personal Protection Policies
• Guide to Personal Protection Insurance UK
• Life Insurance
• How Does Life Insurance Work?
• Who Should Have Life Insurance and Why?

• How Spectrum FA Can Help You find the Right Life Insurance Policy

• Critical Illness Insurance
• How Does Critical Illness Insurance Work?
• Who Should Have Critical Illness Insurance and Why?

• How Spectrum FA Can Help You find the Right Critical Illness Insurance Policy

• Mortgage Protection Insurance
• How Does Mortgage Protection Insurance Work?
• Mortgage Term Assurance
• Decreasing Mortgage Term Assurance
• Mortgage Critical Illness Cover
• Decreasing Mortgage Critical Illness Cover
• Who Should Have Mortgage Protection Insurance and Why?

• How Spectrum FA Can Help You find the Right Mortgage Protection Policy

• Income Protection Insurance
• How Does Income Protection Insurance Work?
• Who Should Have Income Protection Insurance and Why?

• How Spectrum FA Can Help You find the Right Income Protection Policy

Spectrum FA Guide to Personal Protection Insurance

As specialists in the area of personal protection insurance, Spectrum FA have been assisting people for many years, by advising on effective contingency plans, to protect their family’s lifestyle, future and financial security. But what exactly are personal protection policies, who should have them and why? Learn everything you need to know about protecting your family with our complete guide to personal protection insurance UK.

Types of Personal Protection Policies

If you wish to protect your family in the event of something unforeseen happening to you, you will have a choice of different types of personal protection policies:

1. Life Insurance
2. Critical Illness Insurance
3. Mortgage Protection Insurance and
4. Income Protection Insurance

Guide to Personal Protection Insurance UK

This guide is designed to provide more detailed information on the available types of personal protection insurance, how they work, who should consider having them and why putting such contingency plans into place is crucial for families across the UK.

Life Insurance

Also referred to as term or level term assurance or family protection insurance policies, life insurance policies are designed to protect a family’s lifestyle and financial security by providing a lump sum in the event of the insured person’s death.

How Does Life Insurance Work?

Life insurance cover can be taken out for a single individual (the policyholder or his/her spouse/partner) or if a joint policy is selected, both the policyholder and his/her partner/spouse.

Policyholders can decide on the:

• Person to be covered by the policy
• Beneficiary/beneficiaries of the policy
• Level (amount) of cover provided (i.e. the amount of benefit paid out upon the insured individual/s death)
• Term (duration) of the policy

Most policies also offer various optional extras like, for example, critical illness cover. Nearly all policies now include terminal illness cover, at no extra cost. It should be noted here that these two optional add-ons are not the same:

• Critical illness cover is offered at an additional cost and provides a lump sum in the event of the named individual being diagnosed with a specified critical illness, but may not necessarily be terminal (i.e. they may eventually recover from the illness), whereas:
• Terminal illness cover is often provided without additional cost (although this depends on different insurance providers’ and policies’ terms and conditions) and will, as the name suggests, pay out if the insured individual is diagnosed with a terminal illness and is likely to pass away within a year (12 months) of the diagnosis

• Once a policy has been put into place, the named beneficiaries will receive a lump sum in the event of the insured person/s death or, if one or both options were selected, if an insured person is diagnosed with a critical and/or terminal illness
• Please view  Critical Illness Insurance  for more information on what illnesses/conditions may be covered

This lump sum can then be used to assist with household bills and other expenses allowing your family to maintain the lifestyle they are used to; pay off a mortgage or other outstanding loans; secure children’s future education, etc.

Life insurance policies can also be placed into trust, which is especially recommended if, for instance, the benefit is to be used to provide children with the necessary funds to further their education. There are many benefits of placing life insurance policies in trust and depending on the circumstances, if a trust is beneficial, we will recommend and arrange the most suitable trust for the life insurance policy, at no extra cost

Who Should Have Life Insurance and Why?

Life is unpredictable and unexpected tragedies can strike anyone at any time. Losing a loved one is an exceptionally traumatic, stressful experience and without life insurance in place, families may be left with potentially severe financial difficulties if an income provider should die or become too ill to work – which will further add to their stress.

Obtaining life insurance to ensure your family’s financial future is protected if something should happen to you (or your spouse) is therefore crucial for anyone who has someone (partner/spouse, children, other dependents) who is financially dependent on them.

How Spectrum FA Can Help You find the Right Life Insurance Policy

There are many different life insurance companies with various policies, terms and conditions and premium prices. Finding the most suitable policy to adequately protect your family in the event of your death and (if chosen) critical illness diagnosis, while keeping premiums affordable can therefore be complicated and somewhat confusing at times. Seeking professional advice is therefore very important.

Personal protection insurance experts at Spectrum FA have years of experience in assisting householders all over the UK by recommending suitable life insurance cover to meet their family’s unique needs.

Offering completely tailored services, we will recommend the correct level of cover you need, decide whether you should add critical illness cover and/or whether you should place the policy into a trust.

Once we have assessed your specific needs, our access to the leading insurance providers’ life cover policies will allow us to find and arrange the most suitable policy to match your family’s requirements at the most affordable premium rates.

To speak to one of our experienced advisors and arrange a free, no-obligation review of your personal circumstances, please do not hesitate to contact us online, by e-mail: info@spectrumfa.co.uk or by calling our team of specialists on: 01279 315 013 today.

Critical Illness Insurance

Available as an add-on to life insurance policies or as an independent policy, critical illness cover is a type of insurance that allows policyholders to protect their families in the event of the insured individual/s (which may be the policyholder, his/her spouse) being diagnosed with a specified critical illness.

How Does Critical Illness Insurance Work?

Designed to provide a lump sum payable in the event of an insured individual becoming critically ill. Critical illness policies will pay out a lump which can be used to help families with their expenses (household bills, medical/treatment expenses, transport, care for the individual or dependents, etc.) if the person named on the policy is diagnosed with one of a list of specified critical conditions/illnesses.

Which specific illnesses/conditions will be covered depends on any given policy’s specific terms and conditions, but most policies include cover for some or all the following ‘standard conditions’ (as set out by ABI (the Association of British Insurers):

• Coronary artery bypasses
• Kidney failure
• Major heart attacks
• Major organ transplant
• Multiple sclerosis
• Several specific, defined cancers
• Stroke

Many policies cover a much wider range of conditions including, for instance:

• Aorta graft surgery, respiratory failure (advanced stage) and/or liver failure (advanced stage)
• Bacterial meningitis, aplastic anaemia and/or benign brain tumours
• CJD (Creutzfeldt-Jakob disease), Coma (and any associated permanent symptoms) and/or Cardiomyopathy
• Heart valve repair/replacement, dementia and Alzheimer’s disease and/or encephalitis
• HIV infection (if contracted through a physical assault, work accident or blood transfusion)
• Open heart surgery (including median sternotomy), motor neurone disease and/or Parkinson’s disease
• Permanent blindness, loss of speech and/or deafness
• Permanent loss of a foot or hand, and/or permanent multiple system atrophy
• Removal of an eyeball, permanent progressive supranuclear palsy and/or primary pulmonary hypertension
• Spinal stroke and/or stroke with symptoms caused lasting no less than 24 hours
• Systemic lupus erythematosus (if linked with severe complications)
• Third degree burns covering 20% of the face, head or body’s surface area
• Traumatic brain injuries, total permanent disability and/or paralysis (total permanent) of a limb

Naturally, it is important to check/compare policies’ terms and conditions to determine which illnesses/conditions will be included.

Policyholders can specify their desired cover level (amount of sum assured to be paid out); how long they wish for cover to be provided (i.e. policy term/duration) and, of course, who will be covered by the policy.

Many policies also offer additional options and benefits and policyholders will have the choice of which, if any, of these options/benefits to include. Children’s critical illness cover is often included, at no extra cost.

Who Should Have Critical Illness Insurance and Why?

Developing a critical illness could leave a person unable to work, potentially for a long time – which is, of course, extremely distressing for the entire family. Losing this person’s income could further add to their stress by making it difficult, if not impossible, to cope financially.

Providing funds at a time when they are needed most (i.e. to help with medical bills, mortgage repayments, household expenses, perhaps transport and/or care for the person suffering with a severe illness), critical illness protection is an extremely useful, important type of personal protection and should be considered by everyone.

How Spectrum FA Can Help You find the Right Critical Illness Insurance Policy

How much cover you will need, your policy’s duration, which conditions/illnesses will need to be covered and which other available options/benefits you should select depends on your specific personal situation.

As policies also vary significantly between providers, seeking professional advice to help you obtain the most suitable critical illness insurance policy to adequately protect your family is therefore highly recommended.

Having assisted householders across the UK obtain personal protection insurance for years, Spectrum FA specialists in the area of critical illness protection and will take your needs into careful consideration before offering you the most suitable advice and recommending a policy tailored to meet these needs.

To arrange a review of your circumstances (free and with no obligation to proceed) and/or learn more about personal protection/our services, please speak to one of our expert advisors on 01279 315 013, get in touch online or contact us by e-mail: info@spectrumfa.co.uk today.

Mortgage Protection Insurance

A type of life and/or critical illness insurance, mortgage protection insurance is designed to ensure an outstanding mortgage and/or other loans can be paid off in the event of the policyholder (or other person named on the policy) unexpectedly passing away or contracting a specified critical illness.

How Does Mortgage Protection Insurance Work?

Taken out by couples or individuals to protect their mortgage balance in the event of their death or a critical illness diagnosis (if selected), mortgage protection policies ensure a family can repay their mortgage balance if something should happen to the insured individual/s.

Different policy types include:

Mortgage Term Assurance

Sometimes also referred to as level term mortgage assurance, this type of policy is the most suitable option if you have an interest-only mortgage, where monthly repayments cover accrued interest only and the full amount originally borrowed becomes payable at the end of the mortgage’s term.

Policyholders can choose the cover level (pay-out amount; this should be set high enough to ensure the mortgage/other loans can be repaid in full) and the policy’s term/duration, which is typically set between 5 and 40 years and should match the term of the mortgage.

With many policies, it is also possible to add critical illness cover, with cover levels again being decided by policyholders.

Decreasing Mortgage Term Assurance

If, on the other hand, you have a decreasing term/repayment mortgage (i.e. if your monthly repayments not only cover the accrued interest but also reduce your overall outstanding balance), your most suitable course of action would be to opt for a decreasing mortgage term assurance policy.

Here, the level of cover your policy provides decreases, typically in line with your decreasing mortgage balance. Premiums are usually less expensive than those of level term insurance and will also remain the same for the term of the policy.

Policyholders can again choose their cover level (i.e. the starting amount), the policy’s duration and whether they wish to add critical illness cover (and how much).

Mortgage Critical Illness Cover

A mortgage can also be protected with an independent critical illness policy to cover conditions/illnesses described in the Critical Illness Insurance section above. Here, too, a level term critical illness insurance policy will be the most appropriate choice for families with interest-only mortgages.

Policyholders can choose the most suitable cover level, the length (duration) of cover and which, if any, additional options/benefits should be included. The amount of cover and term of the policy should be equal to the remaining balance on the mortgage.

Both cover levels and premiums remain fixed for the duration of the policy.

Decreasing Mortgage Critical Illness Cover

Decreasing term critical illness insurance is, like decreasing term life insurance, most suitable in connection with decreasing term/repayment mortgages.

Again, premiums will remain fixed for the duration of the policy while the cover amount will gradually decrease as the corresponding mortgage decreases.

Policyholders can select their starting cover level (which should be high enough to cover the mortgage’s outstanding balance at the time of taking out the policy), the term/duration and which (if any) optional extras to add.

Who Should Have Mortgage Protection Insurance and Why?

Losing a loved one is incredibly stressful and a traumatic experience for the entire family. Having to face the potential loss of a home due to an inability to pay off a mortgage will further increase stress levels and is the last thing any grieving family should have to cope with.

Protecting your mortgage and consequently enabling your family to continue living in their home – mortgage free- in the event of your death or a critical illness diagnosis should therefore be a main priority for any homeowner with an outstanding mortgage balance. Most mortgage providers do, in fact, recommend that borrowers take out this type of personal protection policy.

How Spectrum FA Can Help You find the Right Mortgage Protection Policy

Specialising in personal protection insurance, Spectrum FA are experts in assisting homeowners find the most suitable mortgage protection insurance to protect their families’ financial future and their family home.

Offering bespoke services, we will carefully assess your specific situation before recommending and putting in place the most appropriate policy tailored to meet your needs and circumstances.

For more information on mortgage protection and/or to arrange a free, no-obligation review, please call us on 01279 315 013 now. Alternatively, you can also request a review/a call-back from one of our advisors via e-mail: info@spectrumfa.co.uk or our online contact form.

Income Protection Insurance

Income protection insurance is designed to protect your family from a loss of income should you/the insured individual become unable to work for a prolonged period of time due to an illness or injury.

How Does Income Protection Insurance Work?

An income protection policy will provide a secure, regular income, in the event of an insured individual becoming unable to work due to an illness or injury.

It does so by making a pre-determined monthly payment (typically a percentage of the insured person’s regular income) for a pre-determined term/length of time.

The monthly payments can then be used by you/your family to cover household, medical or travel expenses; rent, mortgage or other loan repayments and other expenses necessary to maintain their usual lifestyle.

As a policyholder, you will be able to select the:

• Cover level (i.e. the monthly payment/benefit amount)
• Increasing cover – If you would like the cover amount to increase, if so, by what percentage
• Term, or duration, of the policy
• Point at which payments will commence (i.e. how long after the insured person became too ill to work should payments start to be made; policies have what is known as a ‘built-in deferred period’, which is the time between the insured individual first becoming too ill to work and payments of benefit commencing; this period may, depending on any given policy/provider, range between 1 and 3 months, although a longer period can be agreed upon)
• How long payments will be made for

Some policies also offer the option to have:

• Guaranteed premiums, which means premiums will remain fixed for the policy’s full term, or add optional features like, for instance
• Waiver of premium or ‘back-to-work’ benefits

Premiums naturally depend on the amount and extent of cover provided, the length of the deferred period and the length of the period for which payments are to be made and any optional extras you may wish to add, as well as your:

• Age – Older people are generally considered to be more likely to become ill than someone younger. The older you are, the higher your monthly premiums are likely to be. The premium of a policy that is payable to an age of 65 years with a 3 month deferred period and monthly benefit payments of £1,500 could, for example, cost you £50/month if you were 50 years old, whereas a policy with the same terms and conditions could cost you just £25 if you were 30 years old.
• Medical History – People wishing to take out income protection policies must complete a health questionnaire, which will then be used to help determine premiums. Applicants with a history of health issues are considered to have a higher risk of illness and their premiums could consequently be set at higher rates.
• Occupation – There are obviously some occupations that carry a greater risk of injury or illness and the higher the risk in the job you do, the higher your premiums will be.

As smokers are naturally at a high risk of developing diseases related to smoking, your premiums will also be higher if you smoke.

Who Should Have Income Protection Insurance and Why?

Losing an income due to a serious injury or a prolonged illness could leave a family finding it difficult or perhaps even impossible to:

• Cover monthly rent/mortgage repayments, utility bills and other household expenses
• Settle any outstanding debts (i.e. loans, credit card bills, etc.)
• Maintain their usual standard of living

This could put a significant amount of stress and worry onto your family at a time that is already extremely distressing for everyone concerned.

Income protection insurance is also available to full-time parents and/or stay at home partners, who may not have their own income. Certain providers will set a monthly benefit amount that will become payable, if they are not able to perform their daily duties due to illness or injury.

Considering income protection insurance is therefore highly recommended for anyone, but especially for people whose families depend entirely on their income.

How Spectrum FA Can Help You Find the Right Income Protection Policy

The wide range of income protection policies, their flexibility and many available add-ons can make finding the right policy a difficult task. Seeking expert advice is therefore a must.

With years of personal protection insurance experience, Spectrum FA will guide you through the whole process step-by-step, taking your unique circumstances into consideration. We will recommend and arrange the most suitable policy to make sure you and your family receive the right level of cover at the most affordable premium prices.

Please get in touch by calling us on 01279 315 013 or via our online contact form.