If you die and leave your family behind, you can’t stop the heartache, but you can make sure that they don”t have financial worries, that they can stay in their home or have enough money to relocate, and that your children can continue their education. Protecting your family in this way, should the worst happen, is one of the kindest things you can ever do for them.
There are various reasons why people don’t take out life cover so in this short article I want to address some of these.
1. I set that up years ago when I bought a house
That’s good. You have cover in place to repay the mortgage but what about to replace your income?
Even if the mortgage is repaid, an income is still required to meet other daily expenses so it is likely that a plan taken out to cover a mortgage is nowhere near enough for your family’s needs should you die tomorrow.
Plans should be reviewed regularly and if you have since moved to another country you also need to check that the original policy is still valid.
2. I have life cover through my employer
Any life cover provided by an employer should be seen as a bonus but you should never rely upon it as it is outside of your control. It will end if you leave that company and with the average person changing jobs every three to five years in this part of the world you may not have cover when your family really needs it.
Would you really want to trust your family’s future to your employer?
3. My family would help me out if I needed help
Of course your family will help if they are able to, but would they be able to provide all the financial support you’d need? And for how long would they be able to help? Would there be enough money to really give your children what you want? To pay for school fees? Do you really want to have to rely on spending your relatives own savings?
The right protection plans will give you and your family the certainty that financial support will be there when you need it.
4. I’ve got savings I can fall back on
Great news but how long would the money last? Is it really enough? If income stops how long would your family be able to pay all the bills, food, transport, clothing, school fees and all the other expenses that could go on for years?
Assuming you are wisely saving for something like retirement or your children’s education, you’ll also need to think how you would replace these savings if they had to call on them to replace your income.
A suitable life policy will allow you to safeguard your savings for other important things.
5. I don’t need it yet, I’ll sort it out when I’m a bit older
Who knows what is around the corner? The need for insurance is not about age but about your life and your liabilities and commitments. The good news is that the best time to buy protection is when you are young, fit and healthy, as the premiums are cheaper.
Premiums increase, not simply as we get older but as we tend to start having health issues as we age. Many people would be surprised to learn that the average age of a claimant on a Critical Illness policy is just 44 years.
Few people have enough life cover in place for their needs, and more importantly, those of their family. Simple life cover is cheaper than you might think and I can help you arrange plans that are suitable for your needs, at a price to suit your budget.
Money does not replace a beloved husband or wife, or a parent, but the situation is even worse if those left behind are worrying about money and how they will manage to pay the bills.
6. Are your plans set up properly?
I recommend that policies are written in trust as this means that if there is a claim, the proceeds can be paid out before having to wait for probate (the process of verifying and accepting a will so assets can be distributed) which can take a while.
If a couple are of different nationalities, having a life policy in trust can mean not having to pay tax on the proceeds, so is especially important in many cases. More details here: The UK’s Foreign Tax Exemption – information
You need to think about life and critical illness cover in the same way as your car insurance. No one questions insuring a car each year but you hope that the premiums are a waste of money and no claim needs to be made. The same applies with personal protection plans. You don’t want to make a claim but bad things can and do happen and if a claim is made this will be the best value for money you will ever see. And remember that you are much more valuable than a car.
Over many years advising clients, I have sadly dealt with many death claims and claims on critical illness policies. Properly set up plans do pay out when needed. It is not a nice thing to deal with but I know that family have been pleased to receive the proceeds as that means they do not have to worry about money in top of everything else.
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I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on Capital Radio UAE, and on the Facebook group British Expats Dubai.
To arrange a discussion on any aspect of your personal financial planning, please email me at firstname.lastname@example.org All discussion are currently taking place over the phone and we can arrange policies remotely too.
Please take a look at the other useful articles on this website.