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Our team of experts place a firm focus on being jargon free, and pride ourselves on removing the waffle, giving straight forward advice.  So, would you know what a ‘protection review’ would consist of?  Our Protection Specialist Hayley Towlson shares exactly what a protection review meant for one of her clients, who now has full comprehensive cover for their family and business.

One of our Accountancy clients called me to explain that they had recently repaid one of their mortgages, and as such could potentially be paying for mortgage protection insurance they no longer required.  During the phone call our client also stated that they had various existing life cover policies and wasn’t sure where they stood with each of these; what was needed and what was not, and therefore asked if I could look over the details.  I urged them not to cancel any policies until a full analysis of the plans had taken place.

A protection review at this stage involves me and my team contacting all of our client’s protection providers, with their written permission, requesting full policy information.  Once this information is received, I begin a review of the policies in line with our client’s circumstances, and really get to grips with what is needed and what is missing.

Sure enough, my client and their partner each had a ‘decreasing term assurance’ policy which are common protection policies in line with mortgages.  The cover no longer suited their needs due to their mortgage being repaid in full, and as such this policy could be cancelled.

Amongst the other policies was a Family Income Benefit, which is a policy designed to pay a regular income if the policyholder dies.  We established that this cover was not at the correct amount or the correct term, and as such it was recommended that it be replaced with a Relevant Life Cover policy.  This type of cover ultimately provides a tax efficient way to provide for each other, and their child, should either or both pass away prior to retirement.  In essence, we created a death in service scheme for them both.

My client also had an Income Protection policy, which we found did not provide sufficient income should they be unfit to work.  With my client being the main income earner for their own business, they wanted to ensure that there would be a sufficient income stream personally, so that they wouldn’t have to draw profits from the business that ultimately, without them, would not go back in.  A more suitable Income Protection policy with additional benefits such as Fracture Cover was recommended.  Because of the financial risks to the business I also recommended a Key Person insurance policy, whereby if they were to become seriously ill or pass away, their partner would not have to take on the stress of the business.  The policy would pay out lump sums to the business, continuing to pay the employees and potentially bring someone else in, to the run business and pay them a salary.  The alternative to this would be potentially selling the business, but the lump sum would allow for a good sale and not just selling for a rushed price.

Insurance was also put in place for money borrowed by the business should my client fall seriously ill or pass away.  This gives the business future security and takes the pressure away from my client and their family.

Lastly, my client and their partner held a commercial mortgage in joint names.  For this unprotected debt I recommended a comprehensive critical illness policy that would repay the commercial loan in full should either of them pass away or become seriously ill.  This also enabled us to add children’s critical illness cover too, resulting in their child being protected also.

From one quick phone call regarding just one protection policy, it soon became apparent to my client that a full protection review had been worthwhile!  The fact that myself and my team can offer Whole of Market research, not only ensured that my client and their partner were fully protected with more tax efficient solutions than before, but that they also got the most cost-effective deal.

If you think you may benefit from a protection cover review, please don’t hesitate to get in touch, they are complimentary and could be incredibly worthwhile.