Category Archive Insurance & Protection

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Buildings & Contents Insurance

Buildings and Contents Insurance can be bought either together to incorporate insurance for both aspects named in the title, or in part, to provide cover for just a building or just the contents of a building.

This type of policy is designed to provide benefits as and when claims are made against the loss of or damage to a building or the contents therein. Claims must be sufficiently sizeable to warrant a pay-out and will be judged by an assessor from the insurer, to check its validity.

If purchasing buildings and contents insurance (as opposed to just one or the other) you will have one premium but two sum assured amounts; one for the building and one for contents. This is the maximum the insurer will pay out in any one claim. Therefore, the sum assured for the building will be considerably higher than that for the contents.

B&C insurance can sometimes be compulsory if putting a mortgage on a property and the lender requests it be in place as a condition of the loan. Otherwise, like any insurance, you have to make a considered judgement about whether you think it is likely you will have to claim during the life of your loan. If the worst happens and you have to call on your insurance, then it can be money well spent.

The policies have a fixed term of twelve months, and are reviewed annually by the insurer. At this point, it is normal for renewal terms to be issued and the insurer will write to the policyholder directly in this regard on each anniversary of the policy, offering the opportunity to alter the terms of the contract to suit their requirements.

The premiums can be reduced by not having any claims for a prolonged period and increasing your excess (what you pay before the insurer does). Alternatively, premiums can be increased based on the amount being insured – larger properties and individual items of high value will almost certainly increase the premiums – or if claims are made regularly.

Premiums can be paid either upfront for the year ahead or monthly.

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Life Insurance

Life insurance, otherwise known as level term assurance, has a known level of cover that will be paid out in the event of death within a known period of time.

Premiums remain level throughout and should you survive the policy term, there will be no benefit. As this type of contract only provides cover in the event of death there is no surrender value, so if you stop paying the premiums at any time, your cover will cease.

Premiums are based on your personal circumstances but the main areas for consideration by an insurer are your age and state of health. The older you are, the higher the premium will be. Similarly if you have or had a serious ailment the insurer may seek to charge you more or in some cases be unwilling to cover you at all. Higher levels of cover and longer policy terms all increase cost as will the fact that an individual smokes.

Essentially, level term assurance is cheap cover on your life for the benefit of your family or for your business, but there are limitations to it.

As it is a fixed term, there is no flexibility and you will be unable to increase cover or extend the term. Should you therefore find yourself ill at the end of the term you may be unable to obtain further cover.

There is no investment element to the policy, and your sum assured will take no account of inflation.

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Mortgage Protection

Mortgage Protection policies, otherwise known as Decreasing Term Assurance, provide cover that matches the outstanding balance of your mortgage/loan and will pay a lump sum that can be used to pay off the remaining balance of your mortgage/loan in the event of death and/or diagnosis of a terminal illness.

Premiums can be guaranteed throughout the term or reviewable at certain intervals, but should you survive the policy term, there will be no benefit. As this type of contract only provides cover in the event of death and/or diagnosis of a terminal illness there is no surrender value, so if you stop paying the premiums at any time, your cover will cease.

Essentially, term assurance is the cheapest type of life cover and is normally used for the benefit of the life assureds’ family or business, but it does have limitations.

As it has a fixed term, there is no flexibility and you will be unable to increase cover or extend the term. Should your health have deteriorated during the term of the policy, you may be unable to obtain further life cover at the end of the term.

There is no investment element to the policy, and your sum assured will decrease throughout the policy term matching the outstanding balance of your mortgage (providing repayments have been maintained at the current level).

Some products allow you to select the interest rate to match the rate of interest on the mortgage/loan whilst others have pre-set rates, meaning it is important to review the cover if the rate of interest changes.

Premiums are based on your personal circumstances but the main areas for consideration by an insurer are your age and state of health. The older you are, the higher the premium will be. Similarly if you have or had a serious ailment the insurer may seek to charge you more or in some cases be unwilling to cover you at all. Higher levels of cover and longer policy terms all increase cost as will the fact that an individual smokes.

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Accident, Sickness & Unemployment Cover

This type of policy is designed to provide a short-term benefit towards the monthly income lost in the event of the policyholder’s earnings stopping as a result of an accident, illness or unemployment.

The policy benefits will only be paid in the event that the policyholder’s income is reduced/stops. It is not designed to pay a benefit if the policyholder continues to receive their full gross salary from their employer.

As an extension, the policy can sometimes pay a lump sum in respect of accidental death, permanent total disablement or loss of limbs, sight or hearing.

ASU Cover is not compulsory and like any insurance, you have to make a considered judgement about whether you think it is likely you will have to claim during the life of your loan. If the worst happens and you have to call on your insurance, then it can be money well spent.

The policies have a fixed-term of twelve months, and are reviewed annually by the insurer. At this point, it is normal for renewal terms to be issued and the insurer will write to the policyholder directly in this regard on each anniversary of the policy, offering the opportunity to alter the terms of the contract to suit their requirements.

The premiums can be reduced by accepting cover for only some eventualities, for example, opting to buy a certain type of cover e.g. unemployment only or disability only. This would only be prudent if the cover excluded was provided by another means.

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Private Medical Insurance

Private medical insurance provides cover for individuals who wish to seek private medical treatment outside the NHS when they are ill. This gives the individual the choice of specialist consultant, the hospital and the timing of the treatment. Unlike critical illness insurance and permanent health insurance, the contracts are renewable on an annual basis and premiums increase with the age of the client.

When looking at cover, it is useful to know that treatment is categorised in the following way:

  • In-patient – when you go to hospital for private treatment or investigations and stay for one night or more;
  • Day-patient – sometimes referred to as day-care or day-case and is when you go into hospital for private treatment or investigations but do not stay in hospital overnight; and
  • Out-patient – when you receive treatment or investigations which do not need you to stay in hospital as either an in-patient or day-patient.

There are a large variety of schemes available from low-cost budget plans offering limited cover, to those that offer wide ranging cover and benefits. Some illnesses and treatments will never be covered but the following are found in most schemes:

  • Usually included:
    • Cover for treatment of short-term (acute) medical conditions;
    • In-patient tests;
    • Surgery; and
    • Hospital accommodation and nursing.
  • Sometimes included:
    • Out-patient tests;
    • Out-patient consultations with a specialist;
    • Overseas cover; and
    • Cash payment for treatment received as an NHS in-patient.
  • Usually not included:
    • Conditions you had before taking out the insurance (commonly known as pre-existing conditions);
    • GP services;
    • Cover for long-term illnesses which cannot be cured (usually referred to as chronic conditions); and
    • Accident and emergency admission.

Conditions or treatments normally outside cover include drug abuse, self-inflicted injuries, out-patient drugs and dressings, HIV/AIDS, infertility, normal pregnancy, cosmetic surgery, gender reassignment (also known as sex change), preventative treatment, kidney dialysis, mobility aids, experimental treatment, experimental drugs, organ transplant, war risks, injuries arising from dangerous hobbies (often called hazardous pursuits).

Whichever scheme you choose, it is likely that your premiums will rise above the rate of general inflation. This is because of factors which affect how healthcare is provided in all western economies. Your choice of cover will affect what you pay, so your premiums will increase with the more specifications you make or want.

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Income Protection Insurance

Under an Income Protection Plan or Permanent Health Insurance (PHI) policy, as it is sometimes known, an income benefit would be paid to you if you were unable to work because of disability caused by sickness or accident.

The benefit is paid, basically, as compensation for loss of earnings. Benefit will normally start at the end of an initial waiting period, which is normally 4, 13, 26 or 52 weeks long and is payable until you either return to work, die or the policy term expires. The policy term is normally linked to your expected retirement age.

The level of premium for the required amount of cover will depend on the type of plan and the company chosen. Some companies offer guaranteed or fixed premiums, whilst other plans reserve the right to review premium levels or offer the potential to build up a surrender value.

For a slightly higher premium the option is normally available to have the level of cover automatically increased each year in order to potentially provide some protection against the effects of inflation.

The definitions of disability vary considerably. Generally, in order to make a valid claim, the member must demonstrate that he is “totally unable by reason of sickness or accident to follow his own occupation” or “his own and any other for which he is suited by reason of experience and/or qualifications” (known as ‘any suited’) or, indeed, “any occupation whatsoever”.

The definition of disability, i.e. whether “own occupation”, “any suited occupation” or “any occupation”, is obviously crucial for underwriting and claim purposes and will affect premium rates. Clearly own occupation offers greatest protection.

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Whole of Life Cover

A Whole of Life Assurance policy with guaranteed premiums promises payment of a known level of cover upon death of the life/lives assured whenever death occurs, provided that premiums are maintained.

The premium and sum assured are fixed throughout the life of the policy (in some cases it is possible to include an annual increase in the amount of life cover (5%, for example) which would mean that the premium also increases each year).

Some companies offer guaranteed or fixed premiums, whilst other plans reserve the right to review premium levels on a periodic basis. There is usually a small additional cost for the advantage of a guaranteed premium but with the assurance of knowing what future premiums will be.

Premiums are based on your personal circumstances but the main areas for consideration by an insurer are your age and state of health. The older you are, the higher the premium will be. Similarly if you have or had a serious ailment the insurer may seek to charge you more or in some cases be unwilling to cover you at all. Higher levels of cover will increase cost as will the fact that an individual smokes.

Whole of life cover is more expensive than term assurance cover due to the fact that the cover continues throughout life.

There is no investment element to the policy, and your sum assured will take no account of inflation unless increasing cover is selected.

In the event of you being diagnosed as suffering from a terminal illness i.e. one where the expectation of life is less than twelve months the sum assured under the contract will become payable.

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Critical Illness Cover

A Critical Illness plan is designed to pay out a lump sum if you are unfortunate enough to suffer from any of an insurer’s specified critical illnesses but survive for a period of time after diagnosis (normally 28 days).

The lump sum could be used to pay for things like nursing care, home-help, adapting your house to accommodate a disability; it could pay off your mortgage or give you a holiday to recover from treatment.

Critical illnesses usually include cancer, heart attack, kidney failure, multiple sclerosis, major organ transplant and strokes. These are known a core conditions and account for the majority of claims. The comprehensiveness of conditions covered varies enormously and details regarding what will and will not be covered will be fully explained in any supporting literature which you should check to ensure it meets your purposes.

It is usual to include cover for permanent total disability within the contract. The definition of Permanent Total Disability does vary and some insurers define it as the life assured being unable to follow his/her normal occupation as a result of sickness whilst others will define it as the life assured being unable to independently perform three or more Activities of Daily Living as a result of sickness or accident.

Critical illness cover can be included as part of your level term assurance policy or as a separate policy.

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Are your clients getting the right financial advice?

Speak to a financial adviser who can help you

Reading the national and financial press recently, it is very apparent that a lot of people don’t know where to turn for financial advice. With most Financial Services providers having withdrawn from having a local presence, and the ongoing onslaught of bank closures in the average UK high street, it is becoming even more confusing for people to know where to go or who to call for good financial advice.

Establishing a relationship with an Independent Financial Adviser (IFA) you can trust to handle all of your financial needs is critical to achieving your financial goals. Not all Financial Advisers are the same, so you must beware!

The two main types of financial adviser are those who are independent and those who are not. All advisers must tell you what services they offer from the outset. To be called an Independent Financial Adviser, they must be able to offer a broad range of retail investment products, and give consumers unbiased advice based on a comprehensive analysis of the market.

Restricted or tied advisers on the other hand can only recommend certain types of investment products or products from a limited number of providers (possibly only one if tied). It is important to establish at the outset what type of advice an adviser can offer, to ensure you get the best investment(s) to suit your needs and requirements.

All advisers must be properly qualified to give financial advice and hold the Diploma in Financial Planning, or an equivalent qualification. Advisers must also prove that their knowledge is up-to -date through continual professional development (CPD).

Some types of advice require an adviser to have specialist qualifications – pension transfers and equity release for example. Any companies offering these services should have advisers within their ranks who are suitably qualified to provide advice in these areas.

Advisers must also be transparent in the fees they charge for both initial and ongoing advice and services.

With Money Advice & Planning Ltd you can rest assured in the services we offer:

  • Non-restricted advice and planning – no matter what financial advice and products you need, we can help.
  • Face-to-face advice from UK-wide trusted advisers – irrespective of where you are in the UK, one of our advisers will be happy to meet you and discuss matters face-to-face.
  • Fees structured to suit requirements – financial advice should never take on a ‘one size fits all’ approach and our fees will be structured and mutually agreed to suit your needs.
  • Tailored service packages – we don’t believe in one-off financial advice and have several service packages available, so your financial affairs are reviewed throughout your journey with MAP.
  • Whole of market non-discretionary investments – our bespoke investment strategy will cater for your needs and requirements, and give you an investment right for you.
  • Quarterly investment reviews – our proactive analysis of fund performance ensures you are always invested in the best areas to suit your attitudes to risk.
  • Recommended funds – we invest using recommended fund lists, which have been tried and tested to deliver successful returns for our clients.
  • Transparency and peace of mind – clients have 24/7 access to their investments through the MAP portal, so they always know how their investment is performing.

Why not get in touch today to see how we can add value to your business and your clients.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

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Offering solutions, not products

What do you think of when you hear the term ‘Financial Adviser’? Does it conjure up the image of someone trying to sell you as many financial services products as possible – life insurance, pensions and savings plans, to name the most common – or do you see someone who can help you achieve your goals in life?

Here at Money Advice & Planning Ltd, we believe our business is about offering solutions to help people to achieve their goals and aspirations in life.

We have heard it said many times that “a goal without a plan is just a wish” and we believe that to be very true. How many people set out on life’s journey wishing to own their dream house, pay for their kids’ education, enjoy their ideal holidays or retire and spend their time playing golf or lying by the pool at their holiday home? Sadly, for many people, the goals and aspirations that they have turn into nothing more than a pipe dream which they will never achieve.

There can be many reasons why this can happen but for many it is down to nothing more than a lack of planning. For others, they see financial products as nothing more than an expense rather than a tool that can help them achieve their goals.

The role of a Financial Adviser is not about selling financial products; it is about offering solutions to help clients achieve their goals and being there over the long-term to make sure that happens. The financial products are the tools the adviser has in their bag to get the job done.

Money Advice & Planning Ltd does what it says on the tin – it provides the advice and planning needed throughout a clients’ journey, to help them achieve their goals, and after all, your goals are our goals!

If you would like to find out about how Money Advice & Planning can help you achieve your goals, please visit us at www.mapfinances.co.uk and use the contact form. Alternatively, call Andrew Singleton on 0345 241 1808.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.