There are many methods of providing personal, family or mortgage protection. Some are sensible and others less so. We often discover that clients have been sold next to useless plans often by banks or door-to-door sales forces.

Advice is needed to ensure that you are protected no more and no less than you need.

Examples of the types of plan available and what they aim to do.

Life Assurance This is the simplest type of protection as it pays out a tax-free amount on death. These plans can be taken out for a set number of years i.e. 10 years, 25 years or can be arranged on a whole life basis. This means that it will pay out one day regardless of when you die.

A life assurance can be arranged to pay out a lump sum or an income. It can be level, increasing to combat inflation or decreasing to fit around a repayment mortgage.

Income Protection If illness or injury stops you being able to work and causes your income to stop it means that all future plans – retirement, house moving, school fees, etc. – have been disrupted or ruined.

An income protection plan provides a tax-free income until you are able to return to work or, if you are unable to resume working, to your retirement age

Critical Illness This relatively new type of protection. It provides a tax-free lump sum or income if you are diagnosed with one of fifty or so critical illnesses.

These plans have proved extremely popular as they have hit a chord with the public, particularly those with mortgages.

PPI & MPPI Plans Payment Protection Insurance and Mortgage Payment Protection Insurance has been sold by the bucket-load over the past fifteen years. Generally it has been sold by the banks and building societies to unsuspecting consumers on the basis that it covers sickness and redundancy.

You may detect a note of concern within these words and this is because, in a great many instances, these plans have been sold incorrectly. They have been sold to the self-employed and part-timers, neither of whom can be made redundant. If sickness is the worry then an income protection plan is likely to be better value.

So Why Should I Take Advice? Many people would suggest that choosing the right protection is simple. Some believe that it can be done by searching the Internet, others by popping in to the nearest bank.

The reality is that specialist independent advice is needed. Specialist, because these plans (particularly the income protection and critical illness versions) are complex. Independent, because no one company offers the ‘best’ or the cheapest.

If you think cheapest is best then here is my challenge, show me where you parked your Kia…

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Protect your family

How many people actually know what financial state their family will be in if the breadwinner dies unexpectedly?

This is even more pertinent if there are dependent children.

What is not widely known is that an inexpensive insurance called a family protection plan can take this risk away.

This insurance could not be simpler. You select a time period, say 20 years, and if you die within this period the plan pays a tax-free income to the spouse/partner for the remainder of the term.

The example below illustrates this perfectly.

Mr & Mrs Lumpkin are aged 35 and 29 and both are non-smokers. They have two children ages 3 and 7. The Lumpkin’s want to ensure that if one of them dies then the survivor receives a worthwhile income until the youngest child is age 21 (and presumably no longer dependent).

They believe that £1,250 p.m. is adequate.

Mr Lumpkin can obtain such a plan for £9.55 p.m. whilst Mrs Lumpkin pays £7.66 because she is younger.

So, for a combined £17.21 they can provide each other and their family with the financial security we all desire.

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