Insuring ourselves against an undesirable event such as sickness or even death may not be a pleasant thing to think about. But it’s important to have financial peace of mind during times like these, and there are a number of products available that can help protect our families, incomes and properties.

Life Protection Options

In the event of an untimely death, life insurance helps to provide for the remaining family and can alleviate financial worries at a difficult time.

• Level Term Assurance pays a lump sum in the event of death during the term of the policy. There is no investment element so at the end of the term there is no maturity value and life cover lapses. The benefit is paid tax-free and premiums are usually monthly and fixed throughout the term. Because the term and benefit are known from the outset, there is no investment content, so term assurance is a very cost-effective method of protection.

• Decreasing Term Assurance works in a similar way to Level Term Assurance, but the benefit is set at outset and gradually decreases over the term of the policy. These policies can be used as cover for a repayment mortgage, or other loan where the amount of capital outstanding also decreases over time. Because the benefit reduces over time, the premiums are kept very low.

• Family Income Benefit works in the same way as Term Assurance, but instead of paying a lump sum upon death, it will pay a regular monthly tax-free income in the event of death to your dependants up until the end of the term of the policy.

Critical Illness Cover

Critical Illness Cover is usually available as an addition to all Term Assurance plans but can be bought on a stand-alone basis. It generally allows for a lump sum benefit to be paid in the event of diagnosis of certain critical illnesses, such as Heart Attack, Stroke, Transplant, Blindness and Total & Permanent Disability.

Income Protection Options

Income Protection can provide a form of income in the event that you become unable to work.

• Income Protection is designed to provide a tax-free income if you become unable to work due to ill health. The level of premium will depend on the benefit and term selected, with most policies stopping payment of the benefit once you are able to return to work. Income Protection policies are usually written to age 65.

• Accident, Sickness & Unemployment (ASU) was traditionally sold to accompany mortgages, allowing for a regular income to be paid should you be unable to work (or lose your job). The product can be split down and unemployment cover is usually an optional extra available for an additional premium.

It is important to compare ASU and Income Protection closely as one may be more suitable than another.

Business Protection – Key Person/Shareholder/Partnership Protection

Businesses may require protection for key employees within their firm – perhaps the head of sales or a manager without whom the business would not function properly. This protection can provide a fixed sum for the firm should the individual be unable to work, or even die. It is designed to cover the firm’s resulting expenses and the interests of fellow shareholders.

How can Compass help me choose the right protection?