Advice in my shoes
16 Sep 2021
We asked three LifeSearch advisers what protection advice they’d give someone in their shoes. We’re keen to show that protection, like shoes, comes in all shapes and sizes. There’s no one-size-fits-all.
Policies can and should be tailor made to snugly fit the customer.
So here’s Gemma Lawrence, Barbara Stanley and Ben Burgess – three advisers with three very different lives – to explain protection for various profiles, ages and stages … and why it’s always best to get advice, even if you’re an ace Googler.
Gemma Lawrence, LifeSearcher since 2007
I'm a single parent with two girls, five and seven, and I've got a repayment mortgage - so there’s two main needs I’d advise myself to protect.
I’m lucky that I have very good sickness benefits through my job, so while I would recommend Critical Illness Cover and Income Protection to others in a similar situation to me, I have my bases covered. To explain those two a little more - if I’m too sick to work for any reason, Income Protection provides a monthly income, a high percentage of my salary, so it needn’t disrupt my family’s lifestyle. If I’m diagnosed critically ill, Critical Illness Cover gives myself and/ or family access to a cash lump sum that’ll take care of any major or additional expenses.
To protect my repayment mortgage, I’d suggest decreasing cover or, as it’s also known, mortgage protection insurance. With decreasing cover, the total amount reduces over time coinciding with the decreasing amount repayable on a mortgage. I can rest easy that, should something happen to me, the mortgage will be repaid.
Additionally, I’d point myself towards Family Income Benefit (FIB), which pays a monthly incometo myself or my beneficiaries. If I got sick or passed away, my beneficiaries – whether that’s me, my kids or their carers – would maintain a regular monthly income.
As a policy, FIB is so inexpensive that, nine times out of 10, customers like me will go for it.
Gemma’s take: why should customers get protection advice?
We don’t sell to clients; we try to help them build a solution and decide what they actually need. There are so many different options, there’s inflation-linking, different terms and you need to think about the cover types that speak to your circumstances.
So rather than just blindly getting life cover with no sickness cover on top, you can take advice and look at trying to cover all bases.
Barbara Stanley, LifeSearcher since 2014
I'm in a slightly different age bracket to Gemma: my daughter's grown up and I've got grandchildren. My repayment mortgage is almost paid, but I recently re-mortgaged to buy a caravan.
If I was advising myself, I’d suggest I protect the mortgage through a decreasing term policy, and I’d look to Income Protection, which would pay a high percentage of my wage if I ever got too sick to work.
I’d also explain that while a decreasing term policy would pay off my repayment mortgage, it wouldn’t leave anything on top - for my daughter to cover my funeral, for example. So I'd probably advise £10,000 Life Insurance on top to run until I’m 90.
A whole-of-life policy would be another option, but they’re slightly more expensive, and not many live past 90, do they?! I’d explain that, at 90, the mortgage will probably be paid so there should be some savings to cover the funeral. That’s why capping it at 90 (not whole-of-life) may be the way to go.
I’d also present Critical Illness Cover as an option for someone like me. A lump sum payout of £30,000 - £40,000 would cover a loss of earnings and/ or added expenses, such as private health care, if I became very ill.
Barbara’s take: why should customers get protection advice?
I find that everybody focuses on the death part of life insurance - they want to think that if they die, the family will be okay. But few consider what it’d be like to be alive and unable to work, therefore unable to pay the mortgage or keep up their standard of living.
When you get advice, you can think more deeply about protecting your lifestyle as well as your life. Products like Income Protection and Critical Illness Cover are here to do that.
Ben Burgess, LifeSearcher since 2017
The most important thing is to build around family. I have two young kids and everything I do in life is built around them, so insurance is no different.
One question I ask people is if they and their partner are on the same page with money. In my case, the answer’s no – I like to have it, she likes to spend it – so that’d help me to advise me on advantageous protection options.
We live in London and rent so, with no mortgage to cover, I’d advise myself on Level Term Life Insurance, meaning a set amount of money will be released if anything bad happens, and that cash can fill a savings pot.
I’d also advise on Family Income Benefit (FIB) on top. Hand on heart, my wife would be tempted to attack the Level Term lump sum, so FIB would provide an income – money to live off month to month, protecting the big payout for emergencies or big-ticket expenditure.
Myself and my wife – who’s a nurse – both have good benefits through work, but if we didn’t I’d protect my income, as the main breadwinner, through Income Protection. I’d cover my wife through Critical Illness Cover as it’d be more beneficial to have a lump sum payout of one or two years’ of her salary.
With Critical Illness Cover, children are covered for half the amount of the adult should they be diagnosed critically ill before they reach adulthood so with all that in mind, I’d have all bases covered.
I’d also likely access a “menu” or “bulk” discount, for taking so many policies at once.
Ben’s take: why should customers get protection advice?
When the time comes and you need your protection policy to work, you’re either dead or you’re really, really sick.
You need to nail this while you're healthy. While you have your best, logical, rational mind on-the-job, so it pays to talk to someone in-the-know.
If my car breaks down … I don't know how to fix a car. I wouldn't Google it and have a go myself. There are some things you shouldn’t gamble with - your family’s protection and financial security being top of that list.
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