Protection Explained

There are various types of protection products out there and it is easy to get bogged down in all the options available to you. Each type of policy is explained below in a clear and concise manner, helping you to understand which types of policy may be suitable for you.

Income Protection Insurance (IPI)

Whilst insuring your car or your home are seen as necessities, insuring your employment income is often overlooked. 

IPI policies are an effective way of providing a source of regular income for as long as you are unable to work because of illness or injury. 

They are designed to protect a proportion of your income if you are unable to work because of illness or disability. For a monthly premium, it is possible to ensure that if the worst happens you will still maintain a comfortable level of income. 

Critical Illness Cover (CIC)

CIC is a form of insurance that specifies a number of critical illnesses and surgical operations which you can be covered against.

In the event that you suffer one of the specified illnesses or have to undergo an operation, the policy will provide a tax-free cash lump sum. This gives you the peace of mind that when at your most vulnerable you do not have to endure additional worries about a lack of income or paying for treatment costs.

Whole of Life Assurance

Whole of Life policies are exactly as they appear; they will protect your family for the rest of your life in the unfortunate event of your death.

For a regular premium, upon your death the policy will pay out the amount of money that you have insured against, known as the ‘Sum Assured’. This ensures that your family or dependents will not suffer financially in these circumstances.

Term Assurance

Term Assurance policies are similar to Whole of Life assurance in the respect that they pay out a cash lump sum upon your death. However, these policies run for a specified amount of time, or the ‘term’, and may pay out if you suffer a critical illness during the term.

At the end of the term the policy finishes and there is no surrender value attached to the plan.

There are five main types of Term Assurance available, which are: Level Term Assurance; Decreasing Term Assurance; Increasing Term Assurance; Convertible Term Assurance and Renewable Term Assurance.

Family Income Benefit

These policies run for a specified term and will pay out a tax-free annual income to your family should you die during the term.

The income will be paid for the time between the date of death and the end of the term. For example, should you die five years into a ten year term, the income will be paid to your family for the remaining five years of the term. 

The two types of Family Income Benefit are:

  • Level Benefit – The annual amount of income that can be paid in the event of a claim is fixed and does not change.
  • Increasing Benefit – Often called ‘Indexed Benefit’, the level of cover will increase each year in line with inflation or by a set percentage.

The importance of providing cover for you and your family in the event of illness, disability or death should never be underestimated. To speak to one of our expert advisors regarding your protection provisions and how we can help, contact us today.

In December 2013 I had a financial crisis which was made easy to bear thanks to the professional help and advice from the team at Cockburn Lucas. As for my investments, I would not expect anything less than the good service and advice I receive.

- Jim & Rita C, Private Clients