As a company committed to your financial well-being and planning, we are excited to present the latest edition of our client newsletter, designed to empower you on your financial journey. Our mission is clear: to provide you with essential insights and motivation that will turn your financial aspirations into reality.

In this edition, you will find invaluable articles crafted to enhance your financial knowledge and strategy. Dive into the October Budget, uncover critical takeaways, and confidently prepare for 2025. Explore the concept of intergenerational wealth, master the skills to identify financial scams, and grasp the essential role of protection when taking out a mortgage.

Each topic has been thoughtfully selected to equip you with the knowledge necessary for immediate and long-term financial success. This newsletter goes beyond theory; it’s brimming with practical guidance.  Our straightforward guidance ensures you feel not only informed but truly capable as you navigate your financial landscape.

Email: planningteam@hexagonwm.com

Telephone: 01270 250900

Life is unpredictable, and in the United Kingdom, as in many parts of the world, having a safety net in place for your loved ones is of paramount importance. Relevant Life Insurance is one such financial tool that has gained significant relevance in recent years. This specialized insurance product offers unique advantages, making it a popular choice among UK residents. In this article, we will explore what Relevant Life Insurance is, why it is important, and the advantages it provides to individuals and their families.

What is Relevant Life Insurance?

Relevant Life Insurance is a tax-efficient life insurance policy available to businesses in the UK. It is designed to provide a death-in-service benefit for key employees, including company directors. Unlike traditional life insurance policies, Relevant Life Insurance is set up by the employer for the benefit of their key employees. The premiums are paid by the business, and in the event of the key employee’s death, the payout goes directly to the key employee’s family or beneficiaries.

Why is Relevant Life Insurance Important?

1. Financial Security: The sudden loss of a loved one can have a devastating impact on a family’s finances. Relevant Life Insurance ensures that the family members are financially protected, covering immediate expenses and providing a stable financial future.

2. Tax Efficiency: One of the significant advantages of Relevant Life Insurance is its tax efficiency. Premiums are usually tax-deductible for the business, and the payout is typically tax-free for the beneficiaries. This makes it an attractive option for both employers and key employees.

3. Flexible Coverage: Relevant Life Insurance policies can be tailored to suit individual needs. The coverage amount can be adjusted based on the key employee’s salary and requirements, ensuring that the policy provides adequate financial support.

Advantages of Relevant Life Insurance:

1. Tax Savings: Businesses can enjoy tax benefits as premiums are treated as a tax-deductible expense, reducing the overall tax liability.

2. Affordability: Premiums for Relevant Life Insurance are often lower than personal life insurance policies, making it a cost-effective option for both employers and key employees.

3. No Impact on Lifetime Allowance: The payout from Relevant Life Insurance does not count towards an individual’s lifetime allowance for pension savings, offering additional financial flexibility.

4. Simplicity: The application process and administration of Relevant Life Insurance are relatively straightforward, making it a hassle-free option for businesses.

5. Legal and Regulatory Compliance: Relevant Life Insurance policies comply with UK tax laws and regulations, ensuring that businesses and key employees have peace of mind regarding their insurance arrangements.

In conclusion, Relevant Life Insurance plays a crucial role in providing financial security and peace of mind to business owners and their families. Its tax efficiency, affordability, and flexibility make it a valuable asset for businesses and individuals alike. In the unpredictable journey of life, having a Relevant Life Insurance policy is a proactive step towards ensuring a stable and secure tomorrow for those you care about the most.

In today’s unpredictable world, planning for the future has never been more critical, especially for families. Among the many ways to secure your family’s financial future, life insurance stands out as a cornerstone of responsible financial planning. This holds particularly true for families in the United Kingdom, where the right life insurance policy can provide a safety net, ensuring your loved ones are protected even in your absence.

Financial Stability and Security

One of the primary reasons life insurance is indispensable for UK families is its ability to provide financial stability and security. In the event of the policyholder’s demise, life insurance offers a lump sum payment to the beneficiaries, helping them cover essential expenses, such as mortgage payments, education, and daily living costs. This financial cushion alleviates the burden on the family during an emotionally and financially challenging time.

Covering Outstanding Debts

For many families, especially those with mortgages or outstanding debts, life insurance acts as a shield against financial crises. In the UK, where property prices can be high, a mortgage is a significant financial commitment. Life insurance ensures that your family can continue living in their home, even if the primary breadwinner is no longer around to contribute to the mortgage payments.

Educational Support

Investing in a child’s education is a priority for most families. Life insurance can secure funds for your children’s education, ensuring that they have the financial support necessary to pursue their dreams. Whether it’s university fees or vocational training, having a life insurance policy in place guarantees that your children’s education remains uninterrupted, regardless of life’s uncertainties, should the worst happen.

Protecting Business Interests

Life insurance isn’t just for families; it’s also crucial for business owners. Many UK families run small businesses, which are often intertwined with their personal finances. Life insurance can protect the family business by providing necessary funds to cover outstanding business debts, support the surviving family members, and facilitate the smooth transition of the business to the next generation.

Peace of Mind and Emotional Well-being

Beyond the financial aspects, life insurance provides an intangible yet invaluable benefit: peace of mind. Knowing that your family is protected in the event of your untimely demise can bring immense emotional relief. It allows you to focus on enjoying your time with your loved ones, secure in the knowledge that their future is safeguarded, regardless of life’s uncertainties.

In conclusion, life insurance is not just a financial product; it’s a fundamental pillar of responsible family planning. For UK families, it offers a way to navigate the challenges of an ever-changing world, ensuring that their dreams and aspirations are not compromised by unexpected events. By investing in life insurance, families can truly embrace the future with confidence, knowing that they have taken a proactive step to secure the well-being of their loved ones.

Example costings:

The example costings above are illustrative of Standard Terms meaning that all applications for cover will be subject to medical underwriting and could change due to health status.

Next Steps – 

Speak to one of our independent financial planners about how life illness insurance can benefit you, your family or your business.

Call: 01270 250900

Email: planningteam@hexagonwm.com

THE PLAN WILL HAVE NO CASH IN VALUE AT ANY TIME AND WILL CEASE AT THE END OF THE TERM. IF PREMIUMS ARE NOT MAINTAINED, THEN COVER WILL LAPSE.

Do you have enough life insurance? When was the last time you had a life insurance review? Perhaps the only time you’ve ever considered life insurance was when you took out your mortgage. While mortgage life insurance is a very sensible choice that will cover the value of your mortgage if you pass away, there are so many other factors to take into account.

Here’s a surprising statistic: 61% percent of dogs in the UK are insured while only 30% of humans have life insurance. As a nation, we’re good at insuring our cherished animal friends, but often overlook the importance of life insurance for ourselves and our families.

In this article, we’ll explore the importance of different life insurance coverage, how to work out if you have enough, and how you can arrange a life insurance review for your peace of mind.

Do I Need Life Insurance?

Life can be unpredictable. Life insurance is designed to counter this unpredictability and protect and secure your family should the unexpected happen. From paying off the remaining balance of your mortgage to covering other debts and expenses, life insurance can be tailored to suit your needs.

If you’re questioning whether you need life insurance, here are a few questions to ask yourself:

• Is there anybody in my life that relies on my income?
• Do I have a mortgage or other large debts that will become the responsibility of my loved ones?
• Could my loved ones afford to pay for my funeral?
• Would I like to leave a gift to the people I care about?

When Mortgage Cover Alone Isn’t Enough

Many homeowners consider their home to be their family’s biggest asset, when often it’s actually them! Think about how much your income covers during a typical month and what would happen if your family no longer received this money. From the mortgage and energy bills to council tax and shopping costs, all of these things would need to be paid for if you were no longer around. That’s why we recommend looking beyond just your mortgage when arranging cover. Let’s take a look at some other areas you might consider when taking out life insurance.

Firstly, a Quick Note About Mortgage Life Insurance…

When you take out mortgage life insurance, it’s sensible to set the cover to match the value of your mortgage. This will ensure your mortgage value is covered in the event of your death and also ensures you don’t take out more mortgage life cover than you need. If you have an interest-only mortgage that you want to arrange cover for, bear in mind that interest rates and inflation will fluctuate during the term of your mortgage. Make sure you take this into account when calculating how much cover you need.

Covering Loans and Other Debts

If you have secured loans, credit cards, or other debts outstanding when you pass away, the cost of these loans would usually be taken out of your estate after you are gone. That means your family will be left with less money to live on. Life insurance is typically not counted as part of your estate and when written in trust (more on this in a moment), can bypass probate so that loans and other debts don’t affect it.

Covering Family Expenses

If you want to provide for those big life milestones in your children’s lives, your life insurance payout could help them to cover the cost of buying a house, attending university, or starting a family. The cost of these milestones may increase over the years. Look for life insurance policies that retain their value over time, such as a level-term policy or index-linked policy.

Covering Funeral Costs

The average cost of a funeral today is around £4,184. That could be a big expense for your family. For this reason, it might be sensible to leave a sum to help your loved ones cover the cost of your funeral. A level-term insurance policy would be the best choice in this instance as the final payout will remain the same throughout the policy term. This gives you and your family peace of mind that your funeral costs will be covered.

Critical Illness Cover

If your family depends on your income, consider taking out a combined life and critical illness insurance policy. This will pay out if you are diagnosed with a critical illness during the term of your policy.

Example Costings and Payout Amounts

Below is an example of a level-term insurance policy that can be taken out in addition to your mortgage life cover. As you can see, the sum assured stays the same throughout the term of the policy.

All life insurance applications will be medically underwritten and monthly premiums will be subject to change depending on health and lifestyle. The above monthly premiums assume standard terms and were correct as at 24th April 2023.

Putting Your Life Insurance in Trust

When you take out a life insurance policy, it’s important to consider what will happen to the money when it is paid out. How soon will it be paid out? Who will receive it? Will it be taxed?

One way to control what happens to your life insurance payout is to write your life insurance into trust.

A trust is a legal arrangement that ensures your life insurance policy is kept separate from the rest of your estate. It offers several benefits, including:

• Faster Payout: If your life insurance policy is placed in trust, you won’t have to go through probate before the money is paid out. This is particularly important if your family would be in financial trouble from the moment you pass away.
• No Inheritance Tax: When you put your life insurance into trust, it won’t be subject to inheritance tax as it isn’t considered to be part of your estate.
• Can’t Be Used to Pay Debts: Because your life insurance isn’t considered part of your estate, it cannot be claimed by debtors looking to recover debts.
• Choose Where the Money Goes: Depending on how you set up your trust, you can decide who receives the life insurance payout.

Arrange a Life Insurance Review Today

At Alextra, we recommend that you review your life insurance cover every few years as your circumstances change. We’d be delighted to take you through a life insurance review to ensure your family has everything they need should the unexpected happen. Speak to our team today to get started.

Call us on 01270 250900, use our contact form or email planningteam@hexagonwm.com

Sources

https://www.pdsa.org.uk/media/12965/pdsa-paw-report-2022.pdf

https://yulife.com/blog/how-many-people-have-life-insurance-in-the-uk/

https://www.which.co.uk/money/wills-and-probate/end-of-life/funeral-costs-aDPu97f1OM5G

Most people have a need for protection. In an ideal world, fully comprehensive financial protection would include life insurance with critical illness cover as well as income protection insurance. This is because they each protect against a different major life event.

We understand that insurance isn’t something that you’ll want to spend time thinking about. After all, life is for enjoying, not worrying about what’s around the corner. But as financial planners, we’re here to help make sure that you can enjoy life even more, knowing that you have the right protection in place. We can offer advice on the following areas of protection:

Critical illness cover – designed to pay out a cash sum if you were diagnosed with a critical illness, such as cancer.

Life cover – designed to pay out your chosen cash sum if you die during the policy.

Income protection – designed to provide you with a monthly income to help you pay the bills and everyday living expenses, should you not be able to work due to illness or disability.

We can carry out a review of your insurance needs to make sure that you have the right cover for you and your family, taking into account your circumstances, needs and objectives. And, if you already have cover in place, we can check to make sure you’re not paying more than you need to.

Take Action – 

We can review your insurance to make sure you have the appropriate level of cover at the right price. To arrange a review, please give Steven Pepper a call on 01270 250900 or email planningteam@hexagonwm.com

If your policy has no investment element then it will have no cash in value at any time and will cease at the end of the term. If premiums are not maintained then cover will lapse.

A Critical Illness Policy may not cover all the definitions of a Critical Illness. For definitions please refer to your key features and policy document.

A Financial Planner is a professional who will help you to understand if you are going to be okay financially.

They will help you answer some important questions such as:

• Will we be able to afford to maintain our current lifestyle now and in retirement?
• Will we also be able to afford to put our children through university, replace our car every few years, continue to enjoy nice holidays, tick off all of those items on our bucket list?
• How much money do we need to save to achieve these things?
• How do we make sure our relatives benefit from our money when we’re gone instead of the taxman?
• What if the worst should happen? Will my family still be ok?

These are just some of the common questions a Financial Planner can help you to understand the answers to.

There are generally three types of people:

• Those who don’t have enough money

• Those who have too much money

• Those that have just the right amount of money