There are many ways in which a family can protect itself from the financial implications of an earlier death, suffering a critical illness or losing your income due to prolonged accidents or illness.

Commodore Finance Ltd are specialists in this area of financial planning, we can help with many ways to ensure protection for your family and your standard of living when you need it most.

There are several ways you can provide financial protection for yourself and your family should an undesirable event arise below we have listed some of the options available to you.

Level Term Assurance

This is a life assurance plan that will pay out a tax-free lump sum if the life assured should die within the term of the policy. The lump sum payable (Sum Assured) will be fixed at the commencement of the policy and will remain in force for the duration of the plan.

This type of policy can be used if you need a specific sum assured or capital sum to be paid should death arise within a specified time. This could be to redeem an interest only mortgage or to provide financial support for your family should they lose you and the income you provide to the home.

There is no investment element with a term assurance policy, therefore at the end of the policy term there will be no maturity value and the life cover will end. The premiums are usually paid monthly and most often are fixed throughout the term of the policy.

Decreasing Term Assurance

This type of policy works in a remarkably similar way to level term assurance in that the cover is in force for a specified term. This kind of policy is normally implemented to cover a capital repayment mortgage or a liability that would be reducing over a specified term.

The protection cover will gradually decrease over the term of the policy, and due to this fact, the premiums are usually lower than a level term assurance. This type of policy can be a very cost-effective method of providing financial protection. Any benefits paid are typically paid tax free. Premiums are again usually paid monthly and most often are fixed throughout the term of the policy.

Family Income Benefit Cover

This is sometimes seen as an alternative to level term assurance protection, The policy aims to replace any income that would be lost if any wage earner was to die within the household, therefore leaving the survivor with a degree of financial difficulty. Whereas level term assurance is designed to pay out a single lump sum if the life assured dies, family income benefit cover pays a regular monthly or annual income to the survivor or beneficiaries for the remaining term of the policy following the life assureds death.

When you implement this type of cover you choose the sum assured that you would like (how much monthly/annual income you would like paying to your beneficiaries) and how long you want the policy to run for. As with term assurance the income is normally paid tax free to the beneficiaries in the event of the life assured’s death.

Family income benefit cover is a very cost-effective method of providing financial support and protection for your family and love ones should anybody be unfortunate to die whilst having financial dependents.

Critical illness cover can also be added to this type of policy, this would provide an income to be paid in the event that the life assured was diagnosed with one of the specified illnesses as defined in the policy. in this instance the life assured does not actually have to die to be able to make a claim.

The price that you will pay for this type of cover will depend upon your age at the time of application, how long you want the cover for and naturally how much benefits you would want paying in the event of you making a claim.

Critical Illness Cover

This is a type of insurance that pays out a tax-free lump sum if you are diagnosed with, or undergo surgery for, a critical illness that meets with the providers policy definitions during the policy term.  Typically, providers will require the assured to survive at least 10 days after diagnosis. Whilst most providers cover most of the common Critical illness conditions like heart attack, cancer and stroke. It is important to understand the definition the provider applies to each of the conditions covered.

Another factor to bear in mind when looking at critical illness cover is the amount of critical illness conditions covered by the provider. It is fair to say this can differ from provider to provider and the definition of pertaining to each condition can also differ from provider to provider. This is where talking to an independent financial adviser can offer many benefits, as this person will normally have the knowledge to be able to explain each contract to you allow you to make a fully informed decision.

The most important aspect to consider when looking at critical illness cover is the reason why you were putting this cover in place, It is designed to help support you and your family financially while you deal with your diagnosis – so you can focus on your recovery without worrying about how the bills will be paid.

Who Can Be Covered?

The policy can provide cover for you on your own or you can implement cover where you are the policy owner and the cover is on your partners life or you can cover both of you. Cover taken out for you and your partner is known as ‘joint life’. For joint life policies, normally the provider we will only pay out one lump sum if either person dies or become diagnosed with a specified critical illness during the policy term. Cover will then cease and so the second life will no longer be covered.

Implementing the cover on a single life basis even if you are a couple, can ensure that if one of you were to die or suffer a critical illness, the survivors cover would continue. We are here to offer you help and guidance on the best option that would be suited to your personal needs.  

Wills

Having a correctly written Will should also be one of the important elements when looking at your family’s protection needs. A correctly written Will should ensure that your assets will pass to your chosen beneficiaries in the event of your death.

Why it is important to make a Will

It is incredibly important that you to make a Will even if you do not believe you have sufficient assets to leave to anybody, we say this for the following reasons-:

• If you die without a valid Will, there are rules that will dictate how any money, property or possessions should be allocated. This may not be the way that you would want your money and possessions to be distributed.
• Unmarried partners and partners who have not registered a civil partnership cannot inherit from each other unless there is a Will. Therefore, the death of one of the partners may create serious financial problems for the remaining partner.
• If you have children, you will need to make a Will so that arrangements can be made for you if either one or both parents die. Who will be guardian to your children? How will monies be provided to the guardians to cover the costs associated with bringing up your children? Do you need to have trustees appointed to look after and funds until your children become of an age that they can deal with their inheritance themselves?
• It may be possible to reduce any inheritance tax liability or even totally mitigate this if you have a carefully written Will in place
• If your marital circumstances have changed or if a previous relationship has ended, it is important that you make a Will to ensure that your money and possessions are distributed according to your wishes. For example, if you have separated and your ex-partner now lives with someone else, you may want to change your Will to ensure that your assets go to the people you want.

If you get married or enter a registered civil partnership, any previous Will you have made will automatically become invalid

If have life cover provided via your employer, you may have completed a nomination of beneficiary form at the time you joined the scheme. If your marital status has changed or likewise your relationship has changed, you may need to review and change any nomination of beneficiary with your employer.

Power of Attorney

A power of attorney is a legal document that allows someone to make decisions for you, or act on your behalf, if you are unable to do so yourself. You might need someone to make decisions for you or deal with matters on your behalf for any of the following reasons-:

• There may be a temporary situation: for example, if you are in hospital and need help with everyday tasks such as paying bills or dealing with your day to day banking.
• It may be that you need longer term help and support, for example, if you have been diagnosed with dementia, you may lose the mental capacity and the ability to make your own financial decisions or health choices.

Nowadays there are now two types of power of attorney that we get asked to implement for our clients, property and finance and health and welfare. It is possible to implement just one without the other. Typically, the power of attorney comes into effect if you lose mental capacity if you no longer want to make decisions for yourself. Or if you are out of the country for a prolonged period and you need somebody to deal with your affairs in your absence.

A property and financial affairs lasting power of attorney can give someone the authority to deal with and make decisions about things like buying or selling property. Dealing with your day to day banking matters and paying bills and other financial matters including tax credits. tax affairs etc.

A Health & Welfare lasting power of attorney enables a person to appoint another person to make decisions on their behalf in relation to health and welfare matters. This could be matters relating to any treatment you are to receive or not if you were in ill health. It can refer to any matters related to your long-term care.