Life Insurance

What is Life Insurance exactly?

This is simply an insurance you take out on yourself so if you were to die unexpectedly then money is paid out from an insurance company to your loved one’s or family or friends. They can then live at least in some comfort financially so their daily lives are not a struggle.

This may be paying the mortgage off where you live, paying a lump sum to the family or even a monthly amount to cover the normal expenses you have and will continue to have (bills, food, clothes, holiday, etc).

Here at David Nicholls, we can arrange this for you, contact us now for a free quote.

Mortgages, business debts and loans.

If you have a standard capital and interest mortgage (repayment) mortgage then you can have a decreasing term life insurance. This will decrease in value, just like the mortgage does. When the mortgage is finished, so is the insurance. The insurance policy is there to make sure that if you or your partner dies during paying the debt back, the monthly payment cease as you are given money to pay off the mortgage, leaving no mortgage debt to pay every month and a roof above the families head. This will give you peace of mind knowing that if you cant pay the normal mortgage (or rent) payments, the property is covered and the family wont get evicted.

Funeral Costs

Funeral costs are about £4,000 today (in 2020). This cost WILL increase each year. Not everyone has a spare cash amount to do this but they do want the dignity of at least having a good send off and paying their own costs for the funeral. If we die in say 20 years and this cost is £8000 or more, then what? It’s normally suggested for a Whole of Life assurance plan is good as this will last your whole life and will cover the cost if you had for example £10,000 of £15,000 but you can have a term plan till an old age, for example 80-90 years of age.

Whole of Life plans

Yep, they are just that, they run for your whole life until you die. Term plans run over a certain period or until a certain age, whether it’s 25 years for the mortgage or when you reach retirement and want to re-evaluate your plans) they finish as they are term plans. A whole of life plan will last your whole life irrespective of your age. They tend to be slightly more expensive BUT you are saying to an insurance company, AT ANY AGE I want you to pay out. The result is still in your favour and if you die, you will receive more back than you have paid in.

Family Protection

People don’t decrease and it’s best to have this protection on a Level method. This means that if you die early or near the end of the plan term, the value of the life insurance is the same as its remained level throughout. Some customers will opt for this so they protect their mortgages and the family all in one package.

Family Income Benefit

This is an insurance that pays out a monthly amount if you die as opposed to a lump sum. It’s a cheaper premium in general and will cover the normal outgoings that you normal pay out each month. Sometimes customers will have this as well as the mortgage protection so the mortgage is paid off and the family is protected.

Business Protection

There are different ways a business can protect itself, these are the most common.

Key Man Insurance

Business protection is normally taken out to protect the business. 2 great examples of this is as follows, the founder of the business dies and he or she organises and does everything for the business so he or his family can live normally with the income from the business. The wife or husband may not have any idea how to run the business so the business would normally fail and fall into liquidation. Having a key man insurance policy means the partner can seek someone with the same skill set and the business can then hire that skilled person to work for them and the business can continue. This may involve relocating someone from somewhere in the UK as the local area may not have someone that can do the job.

Example 2 – a key executive or manager or director carries out very specific jobs for roles within the company. they die and that role is now not completed which has a negative impact on the company.

  • Key Person Insurance is a life insurance policy a corporation buys on the life of its top executives.
  • Such insurance is needed if that executive’s death or inability to work would be devastating to the future of the company.
  • For small businesses, the key person might be the owner or founder, and in some cases, the only person capable of running the business.
  • The company pays for the insurance, pays the premiums and is the policy beneficary, should the person die or become incapacitated.

How Key Man Insurance Matters

For key person insurance policies, a company purchases a life insurance policy on its key employee(s), pays the premiums and is the beneficiary of the policy. In the event of death, the company receives the insurance payoff. These funds can be used for expenses until it can find a replacement person, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner. In a tragic situation, key person insurance gives the company some options other than immediate bankruptcy.

To determine if a business needs this kind of coverage, company executives must consider who is irreplaceable in the short term. In many small businesses, it’s the owner who does most things – keeping books, managing employees and handling key customers, etc. Without this person, the business would come to a stop.

Here at David Nicholls, we can arrange this for you, contact us now for a free quote.

Shareholder Protection

Shareholder protection allows business owners to buy shares back from any partner who is diagnosed with a critical or terminal illness, or dies. This policy helps surviving owners stay in control and minimises disruption to the business.

Why Share Holder Protection Works

Dealing with ownership in a company can be difficult in the event of an untimely death or illness.

A shareholder arrangement sets out how the shares should be valued and gives the surviving shareholders the right to buy the shares, or the outgoing shareholder the right to sell.

Here at David Nicholls, we can arrange this for you, contact us now for a free quote.

Terminal illness

Not that we want to have an illness that is terminal (an illness that will kill you within 12 months) BUT if you did, it’s completely understandable that you may wish to live the last days of your life as best as you can. You may wish to visit some far off country, to buy a sports car, spend as much time as possible with the family or provide for the grandchildren. All insurance companies will build terminal illness into every life insurance policy automatically.

Indexation

The value of a mars bar today is about £1.00. 10 years ago they were 10p. That’s inflation.

The value of £100,000 now is a lot of money but in say 20 years’ time, it won’t be worth the same so an indexation can be built in so the policy rises with inflation.

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