As you pop open the champagne to celebrate the birth of your child or the start of your retirement, insurance is unlikely to be on your mind. However, life-changing events are the times when you need protection more than ever.
The number of products on the market can be overwhelming, leaving some people confused about what cover they actually need – and what they don’t.
We unravel the personal insurance minefield;
“I’m buying a house with my partner”
If you’re taking the plunge and buying a property with your partner, there are two main priorities from an insurance point of view: making sure the mortgage debt is cleared in the event one of you dies and being able to continue mortgage payments if either of you can’t work due to long-term illness.
The debt only needs to be paid once so a life insurance policy in both your names, tailored to the level of the mortgage and decreasing in line with the debt, will be needed for the life cover and is very cost effective.
You could also include cover to clear the debt should either of you suffer a critical illness. Although the premiums will increase quite a bit, the cover can be invaluable as any lump sum payout enables you to adjust your lifestyle, whether or not you return to work.
Another option is to buy two single life plans. With a joint policy, you and a partner are covered by the same plan but if you take out two single policies they are completely separate plans, meaning you can get double the cover. You can also be insured for different amounts.
Income protection is also a good idea for homebuyers in order to protect mortgage repayments. If your employer provides sick pay, this might not be a requirement. However, if they don’t the level of cover should be for at least your proportion of the mortgage payment and run for at least the term of the mortgage.
It is also possible to provide income protection for people not working, under house person cover which could also be worth considering.
“I’m getting married”
Unless you are buying a place together for the first time – in which case the points above are all relevant – your financial dependence upon each other is unlikely to have changed.
“I’ve just had a child”
Having a child means you need the most comprehensive insurance but you are least likely to be able to afford it. Your children rely on you for their financial well-being and, on the assumption that one parent will not be working for some time at least, there’s never a greater time to make sure you have comprehensive life insurance in place.
Parents should take out life cover so that they have sufficient capital or income in the event the worst happens, until the child becomes financially independent.
It is essential to have cover on both parents, even if one parent isn’t working.
You should also consider topping up your income protection and critical illness cover beyond just covering the mortgage.”
“I’m retiring”
In contrast to starting a family, this is a time when you need the least cover but can afford insurance the most!
If you have no savings, you might want to consider a life insurance funeral plan.
Alternatively, life insurance can be arranged to pay out, in trust, to your estate beneficiaries to offset against inheritance tax liabilities.
As always, the team at Platinum are here to help you through all the changes that life can bring!