Protection Planning Help Guides
We have put together a few help guides that explain various parts of Protection Planning such as life assurance, these guides should only be used as a reference and are solely for information purposes only. We have tried to make them as accurate as possible based on our understanding of current regulations and tax allowances. However Adviser Index always recommends seeking advice from professionals such as Financial Advisers, Solicitors and Accountants for advice on personal circumstances.
What is Protection Planning
Well to begin with it’s not really about how much life insurance you need. Protection Planning is all about how and why you want to protect yourself and your family. If you have a young family then largely your main objective is to protect who ever you would leave if you were to pass away, such as your children and partner, if your single on the other had with a mortgage you may want the secuirty of knowing if you cant work due to accident or sickness then your mortgage can be paid for.
A good financial adviser can help highlight these area’s, sometimes you may think you have the right cover in place and your doing the right thing when in fact a quick 5 minute chat with an experienced adviser can suggest an alternative method or to make a slight change, proving to better protect your family and even save you money.
Choose the right level of coverage
When you’re buying a life insurance policy, it’s important to choose the right amount of coverage. You don’t want to have too much − and pay for protection you don’t need. Neither do you want to have too little − and leave your loved ones under protected.
Determine your life insurance needs
There are two commonly accepted methods for calculating the amount of life insurance coverage you should carry.
The lump sum need method calculates the amount needed to pay:
- Outstanding debts
- Funeral expenses
- Household expenses
- Emergency needs
- Educational costs
The income replacement method calculates the amount needed to replace a percentage of your income for a specific number of years, usually until your youngest child is out of college or until your mortgage is paid off.
In addition to these two methods, you may also want to consider other needs. For example, would you want to provide the financial means so your spouse wouldn’t have to work for the first year after your death?
Calculate future spending
When you’re determining your family’s future financial needs, remember that you don’t have to provide 100% of the income that will be needed. For instance, if you’re planning to provide £100,000 for your child’s college tuition in 15 years, you don’t need £100,000 now – you need an amount that will potentially grow to £100,000 by the time college starts.
The potential to have your policy’s cash value grow over the years to cover future expenses is one of the advantages of permanent life insurance.
What is LIC?
LIC or Life Insurance Cover can be a variety of different life assurance polices, below we have provided some help guides relating to different LIC policies.