Sadly we all come across or have come across situations where the impact of someone’s death, or their suffering a critical illness or prolonged illness which leaves them unable to work, has a devastating impact on the finances of that individual as well as their dependants. At Just-Protect we aim to minimise the impact of such tragic events.
We can no longer rely on the state to protect us and the importance of proper financial protection becomes more and more important.
According to the home owners Alliance in 2025 over a third (36%) of UK mortgage holders have no life, income or critical illness cover and almost half (46%) would struggle to pay their mortgage within six months of losing their income, with 21% facing difficulties within just two months.
If the surviving spouse cannot find the funds to either take over the mortgage payments or clear the debt their home is at risk of being repossessed by the lender.
Aspects of Individual protection can include;
1. Term Insurance
- Decreasing Term Insurance – Generally applicable when someone needs life insurance to pay off a mortgage or a debt and the amount owed to the lender decreases over time a decreasing term policy; simply put, the pay-out that your family receives in the event of your death decreases steadily with the value of your remaining mortgage or loan repayments. With such policies, the premiums will be lower than they would be with level term insurance.
- Level Term Insurance – With level term life insurance, a term is set at the opening of the policy to match the period for which you need cover. The pay-out received when a claim is made stays the same throughout the policy term whether you die in the first year or the last year, or anywhere in between or benefits can be indexed to reflect increases in family commitments. However, should the term finish and you still be alive, you will no longer be protected in the event of your death and you will most likely find that because of your increased age, any policy you want to take out after this will be more expensive.
2. Whole of Life Assurance (WOL)
Whole of life insurance, or life assurance, refers to a type of policy has no set term and guarantee you a pay-out whenever you die. While whole of life policies come with the added peace of mind that comes with an assured pay-out, they are also rather more expensive than both level and decreasing term mortgage life insurance. Whole of life policies are also widely used in Estate and succession planning to settle Inheritance Tax Liabilities, or to simply creating an Estate. We also advise our clients that they will need to seek professional advice from an IFA for Inheritance Tax Liabilities.
3. Family Income Benefit (FIB)
The key difference between FIB and standard life insurance is that rather paying any benefit as a lump sum of money when you die the benefits will pay out a regular, tax-free income to replace your lost income. As with the term insurances, it lasts for a specified period and you can select how much income it will pay out, for how long and whether you want the benefit to increase over time but the larger the monthly pay-out and the longer its paid, the higher your premiums.
4. Income Protection Insurance
We all need our incomes to maintain our lifestyles and achieve our life ambitions. If that income is lost due to sickness injury or ill health we risk running into serious financial problems unless such an eventuality is planned for. Income Protection Insurance (or PHI) is designed to replace your lost income and help keep up with financial commitments in the event that you become seriously injured or ill to the point where you can no longer work to earn a living.
5. Critical Illness Cover
Designed to provide you with a lump sum of money if you are diagnosed with certain illnesses or disabilities. The kinds of illnesses that are covered are usually long-term and profoundly serious. They include, amongst other things, heart attacks or strokes, loss of arms or legs, or major diseases like cancer, multiple sclerosis or Parkinson’s disease..
6. Private Medical Insurance
Private medical insurance is designed to provide you with additional security and peace of mind when it comes to receiving healthcare. In this country we are lucky enough to have a National Health Service that provides medical attention that is free at the point of delivery, however many people still opt for private treatment because of the benefits that it has to offer such as;
- Private care can normally guarantee a shorter waiting time than the NHS and you can often guarantee yourself a more rapid response to whatever illness it is that you may have which in turn means that life can hopefully return to normal far sooner than if you had had a prolonged wait for treatment
- You are likely to be able to have a say in which hospital you are treated and with which consultant you receive your treatment.
- You will normally be provided with your own private room as opposed to a shared ward and are likely to have better facilities during any period of hospitalisation eg the privacy of an en suite bathroom as opposed to a shared one. Many patients prefer this as it affords them privacy at a time when they are at their most vulnerable and allows them peace and quiet when they are trying to recover.
Just-Protect can advise on all these types of policies as well as trusts to ensure that policy benefits are paid as tax efficiently as possible in the shortest possible time.
*Statistics sourced from Finder.com
