Family Protection

What is Insurance?

It’s an arrangement by which a company or party undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.

A thing providing protection against a possible eventuality.

Why is it important or needed?

Life insurance is supposed to make sure that anyone who depends on the insured for income or day-to-day support will be financially provided for when the insured dies or suffers an insurable event.

Facts: From the ABI(Association of British insurers) Overall, £3.6 billion was paid out in protection claims in 2015, which means that every day, insurers paid out more £10m to help individuals and their families cope with the financial strains and worries that can be caused by a life changing event.

Type of Product Number of Claims Total value paid (£000) Average Claim Paid in (£s)
Received Paid % Paid Declined % Declined
Term Life Insurance 29,248 28,734 98.2% 514 1.8% 1,545,616 53,790
Terminal Illness 4,022 3,740 93% 282 7% 375,645 100,440
Critical Illness 18,307 17,045 93.1% 1,262 6.9% 1,128,140 66,186
Total Permanent Disability 875 581 66.4% 294 33.6% 37,889 65,213
Whole of Life 65,672 65,664 99.9% 8 0.01% 389,080 5,925
Individual Income Protection1 14,664 13,372 91.2% 1,292 8.8% 131,026 9,799*
Total claims 132,788 129,136 97.2% 3,652 2.8% 3,607,396 27,935

These stats here are for claims made and not the total events that occurred, as to claim you need to be insured, if you’re not insured you get nothing.

Who might need it & When?

Those who have children always consider life insurance because without one income and care giving, the child has no means of support. In a two-parent household where one parent is the breadwinner and the other raises the children and cares for the home, both should have life insurance because the loss of either would represent a significant blow to the household finances. Without the homemaker, the surviving parent would have to hire someone to care for the children and the home, which would be a significant expense.

Married couples/ long-term partners with no children and do not plan to have children may not need life insurance. It would depend on how much one relies on the other for financial support and what assets and financial obligations one partner would leave the other with upon death or an insured event.

An individual, who has ongoing financial liabilities and responsibilities, where the ability to meet those responsibilities was impacted by an event.

So couples and individuals need insurance.

What can you insure against?

Consequences of a Death

Funeral costs.

Shared financial liabilities.

Future Plans (things you save for)

Loss of Income

Contracting a critical illness

Financial liabilities

Types of insurance

Who might even be uninsurable otherwise?

Premiums are based on a number of factors:

How does it work?

Meaning he can still pay his way, concentrate on getting back to health and not be worried about the

Bills that didn’t reduce or stop arriving.

He will need medical evidence to support his claim of course.

Family income benefit is written to a set period of time known as the term. If you die within this agreed period, the plan will pay out a regular tax-free income until the end of the agreed term. Up to age 90.

This is a useful safeguard for families and lifestyles, softening the impact of lost income due to a death, a type of life insurance.  The policy can cover a parent/ guardian/grand parent or other.

With many uses:

The most common one is for parents, who have children. Where the loss of a partner would have an impact on the house hold income, could fund someone to provide care/support whilst the other continues to work.

Other uses could be to provide regular payments for a given period of time.

Plans like LTA/DTA and whole of life pay a lump sum (insured amount) on death or diagnosis of a terminal illness. And are often used to insure a fixed cost known at the outset.

CIC is a plan that has many variations in its benefits and needs careful consideration, but basically it covers the insured with a lump sum payable on diagnosis of a predefined condition (Heart attack/stroke/cancers and MS) this is one of the most expensive contracts due to the claims experience of the providers, and the number conditions covered.