Other Protection
Simply having life assurance may not be enough. What, for instance, if you contract a near fatal disease or illness? Cancer, stroke and heart disease are the greatest risks. You may not be able to work and so lose your income; but you are still alive so your life assurance does not pay out. And to compound the problem, you may need expensive nursing care or to adapt your home, or even move house.
Except for the very elderly, it is more likely that an individual will be diagnosed as having a critical illness than that they will die in the short term. As a result a critical illness policy is more expensive than comparable life assurance. It is the type of protection policy you hope you never need to claim on, but if you do, the benefits can be a financial lifesaver.
Permanent health insurance, known as income protection makes up income lost through illness, accident or disability. Rates vary according to the dangers associated with one’s job, age, state of health and gender but PHI is thought to be of particular value to the self employed who do not have an employer to continue paying their salary if they are unable to work.
Critical illness insurance, a critical illness policy pays out a lump sum if you are diagnosed with one of a number of specified 'critical' illnesses during the term of the policy. Many life insurance companies offer policies that cover you for both death and critical illness and will pay out the guaranteed benefit on the first event to happen.
Loan protection insurance covers the policyholder if they lose their income, through illness or accident. This type of policy will help with some or all loan repayments.
Mortgage payment protection insurance is set up with a term specifically matching your mortgage term – say 25 years. The policyholder is covered for the term for the amount of their mortgage repayments as long as they keep on paying the premiums.
You need to read the small print before buying any protection policy as there will be exclusions, such as self inflicted injury or dangerous sports. An IFA can point out and explain the small print of each type of policy.
There is a further choice of protection policies that can be used to protect your income and the financial cost of any loan, mortgage or other financial commitment you may have.
Accident Sickness and Unemployment (ASU) can be taken out for any purpose to protect your income and to give you peace of mind. The benefits normally only pay for one year on a valid claim if you have an accident, are ill or become unemployed.
Most of these protection policies operate a 'deferred period' which is the period from when an event happens, that you can claim for, to when the policy starts paying out. You need to check the policy wordings carefully to ensure the policy matches your financial protection needs.
Private medical insurance can cover you for private medical treatment and you can choose to add on extra cover, such as dental cover. You may select the hospitals that you would want to be treated in close to home. As always the more benefits and the more comprehensive policy you select the more it will cost.
Long-term care insurance is designed to cover you against the cost of nursing-home care in your old age and you can pay for it as a lump sum or in regular payments.
