You may be familiar with insurance for your home or car, but there will come a time when you need to protect things even more important – your life, health, income and pension. Take steps to make sure you and your family are taken care of if the worst happens.
Life cover pays a set sum to your family or dependents if you die within the term of the policy. Think about what you want the money to cover when you set the amount – it could be to clear a mortgage or other debts, pay funeral costs, or money to support the living costs of your family for a period.
Check to see if you get a death-in-service benefit from your employer, as this could reduce the sum you need from life assurance.
Any pre-existing medical conditions may not be covered or push the price higher. Answer all health-related questions as fully as possible, because your insurer may not pay if it believes you have not disclosed important information.
Critical illness cover
This can be bought as a separate policy or alongside life assurance. It pays a set sum if you are diagnosed with one in a list of serious medical conditions, such as cancer, even if you recover.
When you set the sum to be paid out, consider the bills you would want it to cover, and perhaps costs that could arise from your recuperation, including adapting your home.
Income protection substitutes your income if you become unemployed due to an accident or sickness. It pays out for a fixed period, or until you start working again, retire or die. You can set the policy to pay a replacement income, or just to cover essential bills.
Make a will
You must have a will that clearly states your wishes, because if you die intestate – without a will – you have no say over what happens. The court determines how your assets are distributed. Only married or civil partners and some other close relatives can inherit. So, failing to leave clear instructions in a will means relations by marriage, close friends and even unmarried partners – misleadingly called common-law spouses – could be left with nothing.
Even if you are married or in a civil partnership, the rules can decide who gets what. For example, in England and Wales, the spouses of those who die intestate will only get up to £250,000 if there are any children – the kids get the rest.
You can make a legally binding will without the help of a solicitor but run the risk of it being challenged if there are mistakes. Low-cost will-writing services exist if your affairs are straightforward, but more complex situations are better handled by a solicitor.
Protect your pension
Your workplace pension is an extremely valuable investment and it’s good to know how you can protect it and the ones you love.
By nominating a beneficiary using an Expression of Wish form, you can make sure your loved ones benefit from your pension. It’s quick and easy to do online through your PlanViewer account, although not all plans allow this to be done online. You can choose to nominate a person, divide your pension between family and friends, or give some or all of it to charity.
To update your beneficiary PlanViewer, go to ‘Manage my plan’ and ‘Update beneficiaries’.
1 gov.uk - https://www.gov.uk/inheritance-tax
The value of investments can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser. The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age. Tax treatment depends on individual circumstances and all tax rules may change in the future.