We talk a lot about protecting your home, your loved ones and you. But in reality how does that look?
Managing Director of McLean Financial Services, Cameron McLean and his Chief Operating Officer (also his wife), Mabel McLean are sharing theirs in this blog post.
Married for nine years and with two children; Harris age 5 and Freya age 3, it’s safe to say that having the right protection in place was always paramount to Mabel and Cameron.
When thinking about their protection portfolio they both considered the following scenarios:
- Both die before the children are adults.
- Cameron predeceases Mabel.
- Mabel predeceases Cameron.
- Either are diagnosed with a specified Critical Illness
Cameron is the main earner but if he were to pre-decease Mabel, he wanted her and the children to maintain the lifestyle they currently live. And pay off debts such as the mortgage, credit cards and car.
If Mabel were to predecease Cameron the issue of money was not as important. Cameron would continue working and Mabel’s policy would cover the mortgage, taking away a significant outlay for Cameron as well as securing the home for the children.
The worst case scenario is both Mabel and Cameron dying before Harris and Freya reach adulthood. The business would continue running but Harris and Freya would not be the recipients of any income from it. So any protection would need to cover their living expenses until they were of age (21 in this example). Not to mention pay off all debts as there’s no income and we wouldn’t like to see the money set aside for Harris and Freya to be swallowed up by the estate.
The horrible middle ground is the treatment for a cancer or terminal illness. All the challenges of trying to juggle family life, work for the other partner and treatment is not something that we want to think about. It is a lot easier talking about the what IF before it happens.
The Protection Portfolio
Mabel and Cameron have five policies within their portfolio;
- Life assurance and critical illness with Aviva for Mabel
- Life assurance and critical illness with Aviva for Cameron
- Death and Family Cover with Vitality for Cameron
- Death in service for Mabel
- Death in service for Cameron
The total monthly premiums, excluding the death in service, is £84 a month. The death in service benefits are from the business so there’s no personal monthly premium to pay.
The Aviva policies will pay out sufficient sums to cover the outstanding mortgage balance. In the event that both are paid out any surplus funds would be held in trust for Harris and Freya, as stipulated in the joint will.
The Vitality policy would come into force upon Cameron’s death. Mabel would receive £2,000 per month till Harris turns 21.
The Death in Service benefits would again ensure there is sufficient money to clear outstanding debts and allow for the standard of living to remain, relatively, unchanged. It would also pay for the funeral costs.
Did the monthly premium surprise you? To break that down £84 would pay for:
- Meal for two with some drinks
- Two or three takeaways a month
- A month of takeaway coffees
- A new outfit or two
Why did Mabel and Cameron use the specific providers of Aviva and Vitality? That is a harder question to answer but it was done with looking at things such as who also offers cover for children, what helplines and services come as part of the package.
For instance with Vitality you can earn points by maintaining an active lifestyle. This translates into three free movie tickets with Vue or Cineworld every two weeks. There is also a host of discounts available through Vitality too.
Protect Your Loved Ones
Get protection in your twenties. It’s much cheaper to insure you when you’re young and you can fix the monthly premiums so it never changes.
Think about what and whom you’re protecting. Think about your budget.
Consider what your current employer is offering but also factor in if/when you change employer. Not all benefits packages are made equal. They are also not mandatory by law. It’s a “nice to do” but not an essential part of employment. You can’t have too much cover but you could certainly have insufficient cover.
Arrange a will as your wishes will then be legal obligation. They can still be contested but there’s less chance of your wishes being contravened. But if you die without a will in Scotland this is known as an “intestate estate”. The law sets out how intestate estates should be divided. Someone who represents the person who died and deals with his or her estate is called an “executor”. Do you really want the Government to say who gets what, how well do they know you and the dynamics that make up your life?
Speak to Protection Advisor. There are a myriad of companies offering protection products out there. But they are not equal nor is there a “standard” type of policy. You need to ensure the fine print has been read and understood. Any clauses need to be pointed out and clarified.
It is a privilege and luxury to be able to afford the monthly premiums. We absolutely understand that not everyone has the budget to spend nearly £100 on insurance premiums. But we also ensure our clients are aware of their options. Our advisors will work with you to build a portfolio that suits your budget and needs.
Mabel and Cameron will review their portfolio if there any significant changes to their income and/or life situation. None of us have a crystal ball that predicts the future, it would be nice! We can help mitigate the worst and give you peace of mind that you, your family and your home are covered.
Our advisors are on hand to help and can talk through your options. We do not charge a fee for reviewing or for helping you set up the insurances you need.