 Family
Protection
Life
Assurance
Critical
Illness
Permanent
Health Insurance
Family
Protection
The cornerstone of your financial
planning strategy will be to ensure financial security for your
family in the event of unforeseen circumstances.
Illness, job loss or the death of a wage earner can plunge families
into financial hardship. Taking a little time to assess your risks
and calculate how much money would be needed to cover debts and
provide your family with an income for the future could be the
most sensible thing you do today.
As a rough guide, ten times the wage earner's annual income is
considered sufficient. However, the actual figure will clearly
depend on many variables including age, number of dependents,
assets and liabilities.
Life Assurance
Life assurance is a policy that will pay out either a lump sum
or a series of payments upon death. These payments are usually
tax-exempt.
The proceeds from a life assurance policy can be used:
- to pay off a debt such as a mortgage
- to provide an income for your dependents
- to maintain the payment of school fees
Life assurance can be in the form of either a fixed term or
a whole life policy. These can be combined with other forms of
protection, such as critical illness insurance, which would entitle
you to receive a lump sum if a terminal illness is diagnosed.
Life assurance premiums can be paid monthly or annually.
Critical Illness
The benefit payable under critical illness cover is a lump sum
payable on the diagnosis of one of several specified diseases
listed in the policy. A wide variety of life-threatening and permanently
disabling diseases can be covered. Different providers offer cover
against different diseases and conditions. There may be a requirement
that you survive for a period of 28 days following the date of
diagnosis for the policy to pay out, as the policy is intended
to cover living expenses.
The proceeds from a critical illness policy could be used to:
- Pay off a debt (such as a mortgage)
- To provide an income if you are unable to continue working
Critical illness cover can be provided as a stand-alone policy
or as an option on whole life, term assurance, or endowment policies.
If you decide to purchase one of these combinations you should
bear in mind that you will only be able to claim if you contract
an illness, as defined in the terms of the policy, and you may
lose the life cover element unless you have purchased additional
life cover.
Permanent Health
Insurance
Permanent health insurance replaces income lost through long-term
disability caused by sickness or accident. It is designed for
those who do not require immediate income replacement. Income
benefits do not start until the insured person has been absent
from work for a defined period of time. The client determines
this so-called deferred period when the policy is taken out. It
usually ranges between four and fifty-two weeks and is determined
by the length of time the insured's employer continues to pay
full or half salary to employees who are too ill or injured to
work. Income benefits continue until the insured person recovers
and returns to work. Otherwise, benefits continue until the expiry
date of the contract, death or retirement, whichever happens first.
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