Let's use an example. Dr Cureall, a family man with a large mortgage, has decided it is high time he sorted out his protection requirements.
He wants to know what types of protection there are, and approaches us to ask for advice.
We explain there are 3 types of cover:
?Life protection, paying out a lump sum or income over a certain period of time if you die
?Critical Illness protection, a lump sum paid if you have a specified illness or are totally incapacitated
?Permanent Health Insurance, an income paid to your normal retirement age (or while you are ill) if you cannot work for health reasons
Dr Cureall decides he would like to cover all eventualities (next newsletter explains why this is a good idea). The cover linked to the mortgage will be a reducing benefit (he has a repayment mortgage), whilst the family income benefit will be indexed to take into account of inflation. The aim here is to pay off the mortgage and leave enough for his wife and children to continue their lives without any financial worries.
So let's look at each type of protection:
Life Cover
This is the easiest type of cover to understand. It pays out a lump sum on death and normally the policy to buy is the cheapest one the Cureall`s can find. They may want guaranteed premiums, which means that the insurance company will not increase their future premiums if they are paying out a lot of claims and need to increase their premium to compansate for this. The alternative is reviewable premiums.
Secondly, and crucially, the policies must be written under trust for the beneficiaries. This means any monies will not form part of Mrs Cureall`s estate, and therefore not compound any inheritance tax issue, but still ensuring the Cureall`s will receive their money (potentially saving thousands of pounds of Inheritance Tax).
In our experience, the majority of life assurance policies are not written under trust.
Critical Illness
This type of protection has become more popular in the last few years, particularly with a view to paying off debt. It is often taken out in conjunction with income protection (PHI).
Since this form of protection is dependant on the number of conditions covered and their wording, there can be a huge difference between companies.
Let's look at a couple of examples:
Heart attacks account for a large percentage of claims. Many companies will insist on there being 'typical chest pain' present for them to pay out amongst other criteria. However, a small proportion of companies do not stipulate this and may be more attractive.
Total Permanent Disability is seen as a 'cover all' if the condition does not fit a specific illness listed in the policy conditions. So if Dr Cureall cannot work then we could assume he'd be covered. Maybe, but not always. Many companies specify in their occupation definitions that the claimant must return to work if they are 'suited' to another job or even worse can perform 'any' type of job. Not very reassuring if you find you have this type of plan as a doctor or dentist. Where possible, you should make sure the plan has an 'own' occupation definition (which may not normally cost you any more money).
Permanent Health Insurance
This is a crucial part of protection. Whilst thousands of pounds have been paid in claims over the years, you really do need to be aware of the pitfalls:
? Own occupation not specified ? The classification of occupation increases premiums to far higher levels ? Exclusions such as mental illness ? No "waiver of premium" meaning you still pay your premium on receipt of benefit ? Premiums are not guaranteed, meaning they are vulnerable to increases ? A poor choice of deferment periods (when the income starts to pay out) ? No option of indexed protection to protect from the effects of inflation
It is interesting to note that out of the top 14 companies that would be price competitive for the type of cover discussed, we would typically only use 2 because of the quality issues!
The Financial Tips Bottom Line
It's likely you have bought one or more protection policies.
We're often surprised at how many doctors and dentists have policies with small print NOT working in their favour. We urge you to check your policy documents and make sure you're not paying for something that may not pay out anyway. Over the life of a policy we're usually talking about thousands of pounds, so don't put it off!
Copyright (c) 2006 Ray Prince
Military personnel have extremely different needs when it comes to insurance than that of the average person seeking insurance. Military personnel need to be concerned about insurance issues such as army kit insurance and even common insurance, such as personal accident insurance, have different specifications and requirements than those of other such insurance problems. Abacus realizes these differences and has many insurance policies that take into consideration these special needs and tailor policies to perfectly suit those serving in the military. The personal accident insurance and army kit insurance that Abacus provides are only two examples of how the company goes above and beyond serving those that serve us, but these examples are some of the best.
Upon entering the military, soldiers are given a standard-issue army kit for which they are solely responsible for. These kits include things such as bullet-proof vests, ammunition, basic survival items, and weapons. Because carrying these kits around just about everywhere an individual goes is necessary, not only for survival purposes but also for training exercises, there's little question that a person will be able to keep the army kit on them without ever having to replace part of all of the kit. But doing so can cost hundreds and even thousands of dollars and so, if part of the kit needs to be replaced, a soldier can find they are unable to pay for other necessities, such as their mortgage or providing food for their family. This is why army kit insurance is so very important as it will help to cover the costs of repairing or replacing any part of their kit. Abacus has army kit insurance that will not only help a person to do this without feeling any real negative effects themselves but the army kit insurance Abacus provides also covers other costs such as protection against liability should a person become injured on their property. Abacus army kit insurance can also help protect the belongings in someone's home, which is just another reason why Abacus is such a wonderful insurance company for military personnel.
There's little doubt that military personnel often find themselves in dangerous situations, where they are likely to become injured, such as during times of war. Abacus provides comprehensive personal accident insurance plans that will cover not only the person serving in the military, but also their spouse should they choose this option. The personal accident insurance that Abacus provides not only covers the policyholder for things such as the loss of use of a limb or other bodily part but it also provides special coverage, specific to military personnel that will cover things such as injuries from shrapnel, flesh injuries, or blast injuries. Standard personal accident insurance policies generally provide hospitalization benefits after a person has spent 5 consecutive nights in the hospital but being a leading insurance company, Abacus is able to provide this same coverage to military personnel after only 4 nights in the hospital. Abacus also shows that they cater to the military by not creating any exclusions during time of war, which is often when those serving need it the most.
Both Ray Prince & Anthony Bates are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Ray Prince has sinced written about articles on various topics from Finances, Babies and Property Guide. Ray Prince is an Independent Financial Planner with Rutherford Wilkinson plc, and helps UK Resident Doctors and Dentists get the best deals on mortgages, protection and investments, as well as helping them achieve their financial objectives. Click here fo. Ray Prince's top article generates over 33100 views. to your Favourites.
Anthony Bates has sinced written about articles on various topics from Finances, Join the Army. With qualified advisers dealing with . Anthony Bates's top article generates over 720 views. to your Favourites.