The key types of insurance every HNW individual should have

Insurance is something that can often be overlooked. If you’re buying a new home, the tendency to become caught up in the process and forget about other details is very easy to do. However, it is in fact incredibly simple to put in place – especially when sourced in the right way.   

It may seem like an unnecessary and overpriced expense on top of your mortgage payments, yet the importance of certain types of insurance are paramount if your children, partner or relatives depend on your income and you have significant assets.

To ensure your family, home and finances are always protected, we’ve outlined the key types of  insurance you should consider as a high net worth individual…

• Life insurance

Although we hope you’d never need it, having personal protection in place will secure your family’s financial future should any unexpected or tragic circumstances occur. Life insurance is designed to pay out a lump sum on the death of the insured person, to protect the family’s expenses or to help pay off a mortgage.

Many clients will take out life insurance at the same time as their mortgage and set it up for the same term, as it is usually paid in monthly premiums that stay in place until you cancel. Most insurers can even help put the policy into a basic trust to avoid it being classed as part of your Estate for Inheritance Tax purposes.

There are other types of life insurance available dependent on your financial situation, including Whole of Life Insurance that simply runs indefinitely, or Life Insurance in Trust, which is beneficial for tax planning and easily accessible for dependents when they need it most.

• Critical illness cover

If you are diagnosed with a life-threatening condition or serious illness, the last thing you want to be worrying about during such a stressful time is paying bills or meeting your mortgage payments. Critical illness cover will release a tax-free lump sum if you are diagnosed with a specified serious illness or medical condition, such as cancer, a heart attack or stroke, to ease the pressure of meeting payments, provide financial support and most importantly, peace of mind.

• Income protection

In the event of an illness, Income Protection will pay out a proportion of your monthly income in installments to replace any loss in earnings until you are able to return to work. One key worry of people suffering from any of these circumstances is being unable to pay their mortgage, so this tax-free replacement income will sustain payments and any other expenses.

Critical Illness Cover does not supply a regular income, which is where Income Protection comes in; to cover overall expenditure for anything between one and 12 months for example, rather than just one lump sum. Although Mortgage Protection is often the first policy homeowners consider, Income Protection can be more beneficial as you are more likely to be unable to work due to sickness than death.

• Family Income Benefit

Family Income Benefit is another type of Life Insurance, yet one that pays out a regular tax-free income to replace your earnings, rather than the traditional lump sum.

This is beneficial if you wish to provide your family with a regular income rather than a bulk pay-out. It can work well if you have a young family and want to cover until the children are a certain age, but can also be used for everything from everyday expenses to school fees..

Whether you’re a single or double income household, the financial impact of your death or illness could leave your family unable to cover mortgage payments or day to day expenses, thus putting them at risk of losing their home.

We can help you find the best policy so you have the peace of mind you and your family will be protected no matter what the future holds. On top of that, we will do so with no hidden fees to help you secure the best price available.

For more information or if this is something of interest to you, please feel free to get in touch.