PROTECTION PLANNING

People are often unsure of what is meant by protection planning, so the following example may help.

One typical application of protection planning is to cover against events that might lead to a loss of income. If you have dependants, please take a moment to consider what would happen to them if you were no longer able to earn a living, either because you died or became long-term sick. Would there be enough money for your dependants to get by, or would their standard of living deteriorate?

In this particular case, potential solutions to protect your loved ones against such unfortunate events are:

• life assurance (a policy that will pay out a benefit on your death)

• permanent health insurance (a policy that will pay out a benefit in the event of long-term sickness)

In summary, areas where protection cover can be helpful are:

• life assurance (re income protection, mortgage protection, inheritance tax mitigation)

• permanent health insurance (re income protection)

• critical illness cover

• private medical insurance (re private medical care / hospital fees)

Given that a person's disposable income is limited, the amount of cover that can be taken out is often restricted to how much can be afforded by way of premiums. The cover that is required therefore needs to be prioritised so that what you end up with meets your most urgent financial planning needs.

For details of our Financial Planning Service click here.