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Point of View

Are you prepared for the unexpected?

Read our six tips to consider when reviewing your financial protection needs...

Living a healthy lifestyle and being in good health is something that the majority of us aspire to. We are often encouraged to look after ourselves by maintaining an active and healthy lifestyle.  

However, one thing that is certain is that despite our best efforts, falling ill can happen to anyone at anytime, with little or no warning, Hilary Clinton’s recent diagnosis of pneumonia proves exactly that.  

Being diagnosed with a life threatening illness can turn people’s lives upside down. It can shake a family’s security, impact on the ability to work and quickly affect the stability of finances; being financially prepared and having given serious thought to how the family’s finances will be affected can make a big difference.

We believe that in taking care of our health, we should also take care of our finances; protecting what we have got, and insuring our lives or health. In other words, a back-up plan in case we have to face the sad fact of a premature death or life-threatening illness. Should a partner, father, mother or child fall ill, it could provide the money for life to continue in the best way it can. This could mean being able to afford to take time off work to recover, or care full time for the patient,  or to pay off a mortgage on a home to reduce your expenditure.

Life insurance and critical illness cover are two types of insurance policies which can offer financial protection to a family should serious illness become an unwelcome part of life. They are similar in that they both generally run for a set number of years, for a set sum assured and for a monthly premium agreed at outset.

While a life insurance policy will pay out in the event of the death of the person whose life is assured; a critical illness policy however will pay out in the event of the person who is assured being diagnosed with one of a list of specified illnesses. This may include for example, heart attack, major organ transplant, some cancers or multiple sclerosis.  

This is why we have come up with six tips to consider when reviewing your financial protection needs to get you to thinking - before you actually need it:

  1. Did you know that life insurance can be set up in order to provide your partner with an income? Family income benefit can be a solution to replacing your wage if you die, paying a tax free lump to your partner for a chosen term, such as until the children turn 18.
  2. Life insurance and critical Illness cover is not just for a working partner. If your role is as a stay at home parent or a full time carer then you should consider this contribution in financial terms. Would your partner be able to afford child care and home help costs if you became ill or died? Or would you if it was your partner who died and you needed to return to work?
  3. Did you know that critical Illness policies often protect your children too? Some policies will pay policy holders a pre-determined sum should their child become ill. This allows parents to take time off work to care for their child or provides the cash to adapt a home if needed.
  4. If you arranged your life insurance some time ago, then it may be that you can arrange a new equivalent policy today which is cheaper. Maybe you were a smoker at the time, but have long since given up? It is more complicated with critical illness cover, as any illness you have had since taking out the policy may be excluded with a new policy bought. Speak to a financial planner who will be able to provide you with a new quote and advise on the best course of action.
  5. Check how much you are insured for (the sum assured). It could be that since taking out the policy, your financial commitments have become greater with more debts and children. Not having enough life insurance in place can leave your family vulnerable. Increasing your sum assured may cost less than you think, but provide some valuable peace of mind.
  6. Remember to tell the truth. If you die of lung cancer caused by smoking a packet of cigarettes a day, but you have told your insurance provider that you don’t smoke, then your policy is extremely unlikely to pay out; be open and honest when talking to your financial planner and applying for any policies of this kind.  

If you would like to find out more about life insurance and critical illness cover, email letstalk@sanlam.co.uk, we’ll be happy to help.

Please remember any views or facts expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice. None of the information should be regarded as advice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments and the income from them may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested. Any tax treatment is dependent upon individual client circumstances and may be subject to change.

Sanlam is a trading name of Sanlam Wealth Planning UK Limited (Reg. in England 3879955) and English Mutual Limited (Reg. in England 6685913). English Mutual Limited is an appointed representative of Sanlam Wealth Planning UK Limited which is authorised and regulated by the Financial Conduct Authority.

Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.