Providing Financial Protection for you and your Family

This article looks at some of the different insurance policies that can help give financial protection to you and your family in the event that you are seriously injured or die.

In times of economic uncertainty we become increasingly aware of the fragility of our own personal circumstances. For those of us who have dependants it is not unusual to worry about what would happen if we were to become seriously ill or injured or even die. There are a number of different insurance policies on the market that can provide some financial protection under such circumstances and this article seeks to provide an overview.

Life Insurance

Life insurance pays out a lump sum to your dependants in the event that you die within the period of the policy. There are a number of different types of policy. Term assurance policies run for a fixed period such as 10 or 20 years and, if you die within this period, the policy pays out. Whole of life policies are more expensive however they run until you die so will always pay out. Mortgage term assurance policies run in line with your mortgage and decrease as the outstanding balance reduces. There are specialist insurers who offer cover with no medical and life insurance over 50.

Critical Illness

Critical Illness insurance pays out a tax-free lump sum in the event that you survive for longer than 28 days of contracting a serious illness such as cancer or heart attack. Some policies also cover permanent disablement. Critical illness can, therefore, help you and your family to meet mortgage repayments and everyday living expenses whilst you are unable to work. Those with families or looking at life insurance over 50 often consider critical illness cover too.

Family Benefit

Family Benefit insurance is an alternative way of providing financial protection for your dependants. Rather than a lump sum payment, these policies pay out a monthly amount in the event that you die during the term of the policy. This monthly payment then continues until the policy expires. Policies can either be in one name or both parents names and are designed to help ensure that the family income is maintained over the longer term.

Death in Service

If you are in employment then your employer may provide you with Death in Service cover under the terms of your contract of employment. This means that if you die whilst you are still working for the company then your employer will pay out a fixed multiple (usually three or four) times your annual salary. You will probably have already completed a form nominating who should benefit from the payment. If not, the Trustees of the Scheme will use their discretion.

Whichever type of policy you intend to rely on to provide financial protection for you and your family you will need to balance the level of cover with how much the premiums will be and the period that you'll be covered for. It is also essential that you disclose any relevant information to the insurer. If you don't they may be able to turn down any claim, negating the reason for arranging the policy in the first place.

AUTHOR BIO : Diyana writes regularly about finance and insurance for a range of websites and blogs. She is particularly interested in family related insurance policies such as Family Benefit and Life insurance over 50.

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