By Rachel Efetha, Chartered Financial Planner based in Bedford.
Last year I took part in the Prudential Ride London 100-mile bike ride and took the opportunity to raise money for Bowel Cancer UK. The reason I chose this particular charity is because a friend of friends, Mark, who I had met from time to time at social occasions, but not a close friend, had been diagnosed with stage four Bowel Cancer in 2016 and around the time I started training, the cancer had become more aggressive and spread. It’s with great sadness to tell you that Mark lost his battle with cancer earlier this month.
Mark had just turned 44 and leaves behind a wife and two-year-old son, as well as an ex-wife and son. Until just over two years ago, he had a very normal life like me and you.
Protecting you and your family
As a financial adviser, I’m often talking to people about protection and making sure that if anything happens to them, their dependents are financially provided for. My last website article, published just a few weeks ago, focussed on income protection and critical illness and you can read it here, so today I will focus on life assurance.
When taking out a mortgage, most people with financial dependents have the sense to ensure that they take out life cover for the full amount of the mortgage to ensure it is repaid on death. However, do they review it when they remortgage to pay off some debt/ pay for home improvements/ extend the term? In my experience, this isn’t always the case. I’ve met so many clients who have an old life assurance policy related to the original mortgage which now falls short of the required amount and term.
Once they’ve taken out the policy to cover the mortgage, some people feel they’ve done enough. However, you need to give consideration to whether the surviving spouse will be able to afford to pay the household bills on a sole income, or even no income if they don’t work. Even if the non-working spouse were to die and the breadwinner is the surviving spouse, life will be very different. They might need to reduce their hours to fit around school runs or employ a childminder to do this for them, meaning that finances might become stretched.
What are the solutions?
This is where family income benefit comes in to play. A family income benefit policy pays a monthly income in the event of death until the end of the term of the policy, which I normally recommend is around the youngest child’s 22nd birthday, to allow for any higher education. As it is a type of decreasing term assurance, the premiums are much more affordable than a flat lump sum and is also a lot easier for some to manage as it comes in every month to mirror the bills. If you have children then a policy of this type is absolutely essential to ensure their financial future.
Mark told me last year that he was lucky enough to have an employer that has a good policy for long-term sickness and had sorted out his life assurance before he became ill so hopefully, that should relieve the pressure on his family at this distressful time for them. Please remember that this story is real and there but for the grace of God could be any one of us in his place. If you think you might be underinsured, please talk to us.
How we can help you and your family
If you would like to make an appointment with me or one of my colleagues then please contact the office. Our offices are located in-
Kettering, Northamptonshire
Birmingham, West Midlands
Stamford, Lincolnshire
London, Central London
We also make use of meeting rooms in Bedford, Rushden, Droitwich, Towcester and Northampton. Our initial fact-finding meeting is free and without obligation.
Leave A Comment