Protection Insurance

Protection Insurance Services From Wyke Financial

Wyke Financial has two core areas we specialise in. The first is of course Mortgages and the second is Insurance or “Protection” as it is more commonly known within the industry. Protection is the type of insurance that would cover you for unforeseen events affecting you or your family such as a death or critical illness.

Often the need for Protection is reviewed when securing a mortgage. However, this is not the only instance in which protection should be considered. You may wish to protect your income or secure financial stability for your family if the worst was to happen. Regrettably none of us can predict when life can throw a spanner in the works and as such Protection should always be a consideration.

When having a consultation with Wyke Financial we will consider your specific Protection needs and arrive to an agreed proposal that is both considerate of your circumstances and budget. We aim to outline for you the different areas of insurance cover we can provide and what cover they offer.

Other types of insurance such as buildings & contents or Landlords Insurance will be listed under GENERAL INSURANCE It would be worth your time having a read of the sub sections below so that you can decide prior to your appointment which type of cover is appropriate to you and your circumstances. Although we will of course advise you and recommend an appropriate protection product or package from our panel.

Terminology:

Decreasing Term – can also be known as “Mortgage protection”. This is where the amount of cover you have opted for will decrease over a set period of time. Therefore it may used to cover a decreasing loan such as a mortgage.

Level Term – is where the amount you would receive in the event of a claim remains consistent for the period selected (in addition you may have the option to “index” the cover).

Whole of Life – a life only plan that will pay out whenever you die (no upper age limit)

Indexing – It will be possible to index certain product which will try to protect the pay out value from inflation, although it may also lead to an increasing premium.

Life Insurance

Life insurance itself is a commonly misused term often used to describe the entire Protection market. A more appropriate heading would be “life only” cover.

Simply put, life insurance will pay out a sum of money if the covered party was to die and the circumstances surrounding the death are within the policy’s conditions.

You can decide on an amount of cover that is appropriate to you and how you want the cover to continue.

There are options to have life insurance on a decreasing or level term basis and/or Whole of life. These policies can usually be indexed and written in trust.

Our specialist advisors will help you select what the appropriate cover for your circumstances.

These plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

Life Insurance

Critical Illness

No one ever believes a critical illness will happen to them, unfortunately they do, the effects can be devastating. Critical illness cover is designed to pay out a tax-free lump sum on the diagnosis of certain specified critical illnesses. Critical illness income benefit contracts are also available.

Would you or your family struggle to pay month to month bills or mortgage payments if you had a reduced income? The most common of the critical illnesses are cancer, heart attacks and strokes. Regrettably most of us know someone that has been affected by one of these don’t we?

If you were to fall ill, apart from the physical and emotional damage these illnesses can cause to you and your family, the financial pressure can be huge if you are not appropriately protected.

Well how about a policy that pays out a lump sum to use towards medical expenses or pays off your mortgage so you can focus on getting better? That is exactly what a critical illness insurance is designed to deliver.

Unfortunately a critical illness can strike at any time. In fact 1 in 2 people in UK will get Cancer in their lifetime (Source: Cancer Research UK Feb 15), whilst every 7 minutes someone will have a heart attack and every 12 minutes a Stroke (Source: Heart UK 2017). The need for protection has never been more relevant. Our specialist advisors will help you decide what the appropriate cover is for you and your circumstances.

Plans may not cover all the definitions of a critical illness. The definitions vary between product providers and will be described in the key features and policy document if you go ahead with a plan.

These plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

Income Protection

Did you know that the average UK household has savings to cover themselves for only 32 Days! (Source: Deadline to Breadline research, Legal & General 2017). Furthermore each year close to 1 Million people in the UK find themselves unable to work due to a serious illness or injury (Source: ABI 2015). So if you were unable to work due to illness or injury how would you cope financially?

Most UK employers only pay sick pay for 1 month and even those that pay longer often are on reduced terms. If your employer covers you under an employers group sickness scheme (Group IPI) your salary is continued but is subject to tax and NI in the usual way.

With an individual income protection plan you can replace up to 60% of your lost income (gross) and this benefit is NOT subject to tax.

Long-term income repayment policies usually come into play between the time when your employer stops paying sick pay, and when you collect your pension. They will continue to pay out until you are well enough to return to work or until the end of the plan.

Shorter-term policies or budget income protection are available. These usually only pay out for a limited period of 1 or 2 years but the cover comes at a reduced cost.

Income protection in many ways is a simple product as it does exactly what it professes to which is replace your income. Often they become confused with Accident Sickness and Unemployment Plans (link) these sit in a different part of the market and offer a shorter term cover. Choosing the right Income Protection plan for your circumstances is crucial as lenders will offer different terms and additional benefits.

Income protection plans that have no investment link have no cash in value at any time and will cease at the end of the term. If you stop paying your premiums your cover may end.

Family Income Protection

Family Income Benefit protects a level of income for a fixed term. In the event of death, the amount of income chosen at the outset will be paid for the remainder of the term of the plan. Often the term is set to protect you until your youngest child is 18 or 21.

Family Income Benefit is one of the least expensive forms of life insurance and differs from most other types in that it is designed to pay the benefit, in the event of death, as an income rather than a lump sum.

Depending on your circumstances, indexation might be an option for this type of plan to protect the purchasing power, although the benefit can be level. If indexation is elected at the outset, the premiums and benefit would rise annually, normally by Retail Price Index

In the event of a claim, income can be paid monthly, quarterly or annually and under current rules the income is tax-free. This makes it ideal for Family Income Protection where a family are looking to insure the main breadwinner over a specific term, for example to his or her retirement age.

Family Income Benefit can also include Critical Illness Insurance which is designed to pay the selected income if the policyholder is diagnosed with a critical illness within the chosen term. Critical illness conditions vary from insurer to insurer. Plans may not cover all definitions of a critical illness. The definitions vary between product providers and will be described in the key features and policy document if you go ahead with a plan.

Family Income Benefit therefore should be considered when looking to effect insurance for Family Income Protection. Family Income Benefit is a low cost, tax efficient solution to Family Income Protection.

These plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

Family Income Benefit can also include Critical Illness Insurance which is designed to pay the selected income if the policyholder is diagnosed with a critical illness within the chosen term. Critical illness conditions vary from insurer to insurer.

Family Income Benefit therefore should be considered when looking to effect insurance for Family Protection. Family Income Benefit is a low cost, tax efficient solution to Family Protection.

Relevant Life

If you are a Director of a limited company then you should talk to us about a Relevant Life plan.

Although originally created to offer an alternative for small companies to a group scheme (that often have a minimum staffing level required), the relevant life plan is now more commonly used by family run businesses as a “director to director” cover.

Relevant Life Cover is a tax-efficient life insurance policy, allowing companies to offer a death-in-service benefit to its employees (including salaried directors). It’s set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the person insured. The proceeds go directly to the employee’s family or financial dependants.

Most providers offer relevant life plans on a life only basis as it is widely accepted that this is tax efficient. However a major provider has recently launched a plan that includes critical illness cover. At this time there is still no clarity as to the tax-efficiency of this plan and as with any matter regarding taxation we would recommend you seek independent tax advice.

These plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.