Reading an article in the paper the other day reminded me that one of the most basic functions of my job is in ensuring that clients are adequately protected with life and critical illness cover. This is arguably the most important but often the least appreciated part of my work.
We all have stories of untimely death or serious illness and how families been devastated but have survived because of having financial protection in place.
I’m not going to go into all the details of what plan, who with or what type of cover at this stage but I am going to point out some areas that must be addressed.
I will not be alone in noting that clients have a reluctance to paying for something “they may not need” and tend to try and talk the cost of life and critical illness cover down to a budget.
We use Voyant cash flow modelling to determine the actual financial cost of someone dying early or suffering a critical illness which tends to bring some serious reality to the levels of cover needed.
Often clients will have some protection in place (flogged by a bank in many instances) which the level of cover bears no resemblance to the actual level of risk. There are a lot of fans of nice round numbers out there and clients are usually at a loss as to why a particular level of cover has been arrived at.
Establishing with clients the real cost of early death or serious illness by more rigorous methodology is paramount and the costs of providing this cover are then seen in the right context.
I find that people do understand the need for cover and are much happier to have the right level of protection in place once they see the real amount of money required to make sure their family will be financially protected if the unthinkable happens.
Once we have the right numbers established, then using the appropriate trusts to ensure swift dispatch of any monies in the event of claim should be a given.The option of using Relevant Life policies were possible also adds a very welcome 20% corporation tax saving on premiums.
So to summarise, don’t leave it to chance; make sure the amount of cover is relevant to the level of risk and get the proper amount and type of cover you need.
If you need us to give you a more accurate figure as to how much cover you might need, contact Malcolm Stewart our Voyant guru on 0131 273 5202 and he’d be happy to help out.
Roland Oliver