This aspect of financial planning is probably the most undervalued as it deals with a subject people are a little uncomfortable in discussing openly. Most people perceive protection insurance as only life insurance. In truth there is more to protection than just life insurance. In this section we will not deal with ‘whole of life’ or ‘Universal life’ policies which offer a slightly different concept but will deal with the basics of protecting oneself against unforeseen circumstances.

To be fully protected against these catastrophic events one needs to be dispassionate and clinical in trying to assess your life and the dramatic effect on your surviving family in financial terms.

Therefore you should consider the responses to certain questions. We have listed some but this is in no means exhaustive. We can assist with some thoughts from our experience of dealing with this topic as a dispassionate outsider.

We consider each of the different aspects to protection insurance.

Life
In truth this is a misnomer as it should really be named death insurance. However the public perception of this would be wholly averse to such a term and they would probably never buy it! Life insurance is a much more user friendly title.

Life insurance is a mechanism that protects against a fatal risk that would have a financially damaging impact on a family. It offers some form of financial support at a time of most need. It offers security to families trying to come to terms with the trauma of losing a loved one in that it allows the surviving family the ability to carry on their lives without the additional burden of financial hardship. No one would want their family to suffer in this way if there was some way of helping them. Life insurance gives that help.

So you need to ask some soul-searching questions.

What would you like to happen in the event of your untimely death?

If you died today how much money would your family have to live on for the next few years?

Would this be sufficient to give your spouse enough money to bring up the family on their own, educate your children through University, allow them to take holidays and maintain a lifestyle at a level they enjoyed previously?

It may be prudent to quantify your existing level of cover including company schemes, if any. Some companies offer ‘death in service’ cover as a multiplier of your salary. You should check your contract of employment.

To help in your assessment, a rule of thumb guide for life insurance cover for someone with a family then they should have cover equivalent to ten times their annual income, not including any liabilities such as loans or mortgages which should be covered independently.

There is no limit to the level of cover you may have, the only consideration would be the affordability of the monthly premiums.

Insurance cover should also be reviewed on a regular basis and whenever a major event such as marriage, divorce, birth of a new child occurs in your life.

We can assist you with the assessment of your situation and give recommendations to ensure that you can relax in the knowledge that you have made ample provision for your family’s peace of mind.

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