Losing a parent, spouse or partner can be one of the most difficult and emotional times for a family. Consider how your family might cope if you were no longer around. Would your partner still be able to provide for your dependents? Consider the household expenses - day to day living expenses, upkeep of your home or car, education and activities for your children. If the surviving partner has to return to work, there will possibly be childcare expenses.
If you feel that your family may struggle with these expenses at an already difficult time, then you need a family protection policy. If you are single or don't have any dependents, then this cover is not always relevant to you. You may consider Critical Illness cover and Income Protection as a means to provide an income should you be unable to work due to long term illness.
As the name implies Term Assurance provides cover for a specified term. It can be arranged for the number of years considered most appropriate by you, e.g. when your children are finished full time education and are financially independent.
The level of cover required will depend on the needs and circumstances of the individual or family. This is usually arrived at by striking a balance between the monthly premiums that you can afford and the lump sum required to allow your surviving family members to continue to enjoy the standard of living to which they have grown accustomed. Because the amount remains level throughout the term, your family would receive the same benefit if you were to die in the later years as in the earlier years of the policy.
You can also add other benefits to this plan such as critical illness cover. This will provide your family with a lump sum should you be diagnosed with any of the specified illnesses covered under the plan. This allows you the peace of mind that your family will be able to survive financially while you are recovering from your illness.
Family Income Benefit provides your family with a monthly income in the event of your death. This is a benefit which pays out from the time of the claim until the end of the policy term. As the sum that could be paid out decreases over the term, this type of policy is usually cheaper than level term assurance and can be an option for a family on a low budget. However, this can also be a disadvantage if you make a claim in the later years of the policy, as you will receive much less than if you made a claim in the earlier years.
Critical illness cover can also be added to this type of plan.
The monthly cost depends on different factors - age, health, smoker status, occupation, lifestyle, family history, how much cover you require and for how many years.
There are many providers offering different Family Protection contracts. To select the best contract to suit your needs contact our experienced advisers.