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Insurance forms a significant and very important part of personal and business planning. The chances are that you have several types of insurance – such as insurance for your house, car, medical bills, travel, holidays, mobile phones, gadgets, mortgages, business premises, employees – and perhaps even for your pets.

Many of these types of insurance are essential – however by far the biggest financial risk for you and your dependants is the risk of your death and the risk of you becoming ill and unable to work. Despite the importance of insuring against these risks, individuals may not fully appreciate the appropriate levels of life assurance required, and/or may not be aware of the different structures and tax reliefs available.

TYPES OF LIFE ASSURANCE COVER

The 3 main types of life assurance cover
consist of:
1. Life Cover – this cover provides a lump sum payment in the event of your death. If you have a mortgage on your home, you most likely have life cover on the mortgage – with your lender as the beneficiary in the
event of your death. The cost for certain types of life cover can qualify for income tax relief at your marginal rate, if structured correctly.
2. Income Protection Cover – this cover
provides an ongoing monthly income in
the event that you are unable to work due
to illness/accident/injury/disability. The
cost of this cover qualifies for income tax
relief at your marginal rate.
3. Specified Illness Cover – this cover
provides a lump sum payment in the event
of the diagnosis of a specified illness (such
as cancer, heart attack, stroke, etc). The cost
of this cover is not allowable for income
tax relief.
The importance and appropriate levels
of these types of cover depend of your
personal circumstances and your stage in life.
In an ideal world, we would all have the
maximum levels of all types of insurance –
however, the reality for most of us is that
insurance is often a balancing act between
weighing up the actual ongoing cost of
insurance against the importance and
seriousness of the risk.
As general rules-of-thumb:
I ➤ If you are working but do not have
dependants (such as young children),
you should have income protection
cover to cover most of your income.
Your ability to earn an ongoing income
is likely to be your most important
financial asset.
➤ If you have dependants (such as young
children) you should have adequate life
cover for your family’s benefit in the
event of your death (in addition to life
cover on your home mortgage), and
you should have adequate income
protection cover. In my view, if you have
children, then these two types of life
assurance cover are essential.
➤ Specified illness cover is important;
however, in general, you should only
consider specified illness cover after you
have ensured that you have adequate
levels of life cover and income
protection cover. Specified illness cover
is generally expensive compared to life
cover.
HOW MUCH COVER DO YOU
NEED?
The amount of cover you require depends
on your personal circumstances. If you havensurance forms a significant and very
important part of personal and business
planning. The chances are that you
have several types of insurance – such
as insurance for your house, car,
medical bills, travel, holidays, mobile phones,
gadgets, mortgages, business premises,
employees – and perhaps even for your pets.
Many of these types of insurance are
essential – however by far the biggest
financial risk for you and your dependants
is the risk of your death and the risk of you
becoming ill and unable to work. Despite
the importance of insuring against these
risks, individuals may not fully appreciate the
appropriate levels of life assurance required,
and/or may not be aware of the different
structures and tax reliefs available.
TYPES OF LIFE ASSURANCE
COVER
The 3 main types of life assurance cover
consist of:
1. Life Cover – this cover provides a lump
sum payment in the event of your death.
If you have a mortgage on your home, you
most likely have life cover on the mortgage
– with your lender as the beneficiary in the
event of your death. The cost for certain
types of life cover can qualify for income
tax relief at your marginal rate, if structured
correctly.
2. Income Protection Cover – this cover
provides an ongoing monthly income in
the event that you are unable to work due
to illness/accident/injury/disability. The
cost of this cover qualifies for income tax
relief at your marginal rate.
3. Specified Illness Cover – this cover
provides a lump sum payment in the event
of the diagnosis of a specified illness (such
as cancer, heart attack, stroke, etc). The cost
of this cover is not allowable for income
tax relief.
The importance and appropriate levels
of these types of cover depend of your
personal circumstances and your stage in life.
In an ideal world, we would all have the
maximum levels of all types of insurance –
however, the reality for most of us is that
insurance is often a balancing act between
weighing up the actual ongoing cost of
insurance against the importance and
seriousness of the risk.
As general rules-of-thumb:
I ➤ If you are working but do not have
dependants (such as young children),
you should have income protection
cover to cover most of your income.
Your ability to earn an ongoing income
is likely to be your most important
financial asset.
➤ If you have dependants (such as young
children) you should have adequate life
cover for your family’s benefit in the
event of your death (in addition to life
cover on your home mortgage), and
you should have adequate income
protection cover. In my view, if you have
children, then these two types of life
assurance cover are essential.
➤ Specified illness cover is important;
however, in general, you should only
consider specified illness cover after you
have ensured that you have adequate
levels of life cover and income
protection cover. Specified illness cover
is generally expensive compared to life
cover.
HOW MUCH COVER DO YOU
NEED?
The amount of cover you require depends
on your personal circumstances. If you have






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