Insurance Brokers & Family Protection in Tunbridge Wells, Kent.

What is protection insurance?

Protection insurance includes life insurance but also other types of insurance such as income protection and critical illness insurance. £18.6 million is paid out every day for these types of insurances which shows just how widespread and important they are. According to the Association of British Insurers (ABI), 98% of protection claims were paid out in 2021, meaning the vast majority of people who relied on one or more of these insurances received the financial help they needed at a crucial time in their lives.

What is insurable interest?

In insurance law, you can only buy insurance for something or someone in which you have an insurable interest. This refers to the interest a person must have in an object, property or another person, in order to legally obtain insurance on that object, property or person. The interest specifically means that the person seeking the insurance would suffer a loss should that object, property or person be harmed.

Survival rates are rising.

With medical advances, we’re now more likely to survive many critical illnesses which used to be fatal. But, in many cases, a critical illness can bring life-altering changes and the financial impact can be damaging, especially during our working lives.

It’s reassuring to see that survival rates are increasing. Getting a payment when you are diagnosed with a critical illness would help relieve any financial pressures, which means you can focus on getting better.

Sources: Cancer Research UK, British Heart Foundation.

Louise Baughan FPFS

Louise Baughan is a Chartered Financial Planner (IFA) and also a Fellow of the Personal Finance Society. Louise has a wealth of experience in supporting individuals on a range of financial matters and has first-hand experience of the benefits of critical illness insurance. Read Louise’s story about her battle with colon cancer and how critical illness insurance gave her and her family the financial support they needed.

Louise is an insurance broker and can advise on all aspects of family protection and insurance, including Life Insurance, Critical Illness Cover and Income Protection Insurance. Louise’s technical knowledge is extensive, enabling her to provide analysis and advice in respect of all aspects of pensions, investments, inheritance tax planning, savings and protection.

Case Study: Louise’s Cancer Story.

In 2015, one of our insurance brokers, Louise Baughan, was diagnosed with colon cancer. Louise has written a personal account of how critical illness insurance changed her life, aided her recovery and now allows her to spend quality time with her family.

If you are looking for an independent insurance broker in Kent, you need not look any further than AV Trinity. Our team of experienced insurance brokers is well-versed in the insurance market and can provide you with comprehensive insurance solutions that meet your specific insurance needs. What's more, we are authorised and regulated by the Financial Conduct Authority, which means that you can trust us to provide you with expert advice and guidance.

We offer a broad range of insurance products, including Life Insurance, Critical Illness Insurance and Income Protection Insurance, all of which are designed to cover the risk of unexpected events in your life. Our knowledgeable team understands that every client has unique insurance requirements, which is why we take the time to get to know you and your personal insurance needs. Whether you are looking for personal insurance or business insurance, we have the expertise to ensure you and your family are covered.

Based in Tunbridge Wells, we serve clients both in Kent and across the UK, and our in-depth knowledge of the insurance market means we can recommend the best insurer for your specific insurance needs. As an independent insurance broker, we are not tied to any specific insurer, which means we can offer you a range of insurance products and find the best deals for you. We aim to make sure you have the right cover, at the right price, and with the best insurer.

In summary, if you are looking for an insurance broker in Kent, we are here to help. Contact us today to arrange a free consultaiton, discuss your insurance needs and find out how we can help you.

Useful Life Insurance links from our Insurance Brokers:

• Money Helper Guide to Life Insurance.

• The Association of British Insurers (ABI).

• State Benefits: Bereavement Support Payment.

What is the difference between whole of life insurance and term life insurance?

Both of these insurances are designed to pay out a lump sum (known as the ‘sum assured’ or ‘sum insured’) on the death of the person who is insured. The difference is in how long the insurance policies last for before they expire.

• Whole of life insurance is designed to cover someone’s entire lifetime, meaning the insurance will pay out on the policyholder’s death whenever that occurs. These are most often used by people looking for a cost-effective option to provide a relatively small amount of money on their death to cover funeral expenses. They can also be used to provide much larger sums of money to offset potential future Inheritance Tax (IHT) liabilities. You can read more about IHT here.

• Term life insurance is designed to run for a set period of time, for example, 25 years. The end of the term is often determined by the policyholder’s planned retirement age, or to coincide with the end of their mortgage term. There are different types of term life insurance designed to address different needs, such as mortgage term insurance (or mortgage protection) and family income benefit insurance.

What is family income benefit?

Family income benefit is a type of term life insurance policy. Unlike with most life insurance policies which pay out a lump sum to your loved ones on your death, family income benefit provides your loved ones with a regular, fixed, tax-free income. Regular income payments will start from the date of death and pay out for as long as the policy has left to run, until the end of the policy term. The policy term is chosen at the outset by the policyholder.

It can be a difficult decision to determine the right amount of cover required and how long you might need the insurance to last. This is something we have the experience and knowledge to help with, giving you the peace of mind you are seeking for you and your loved ones.

Can I set up life insurance on someone else’s life?

Typically the person insured on a life insurance policy is the policyholder, but some plans can be set up on the ‘life of another basis’, which is to say that the person setting up the policy has insured someone else’s life, like their spouse.

However, for this to be allowed, the rule of ‘insurable interest’ must be met - this is to prevent these plans being used for illegal or immoral purposes.

How much life insurance do I need?

The amount of life insurance someone needs is a very personal consideration and can be based on numerous factors, such as:

• How much your outstanding mortgage and any other debts are worth.

• How much money you would like to leave to your loved ones to ensure they are financially cared for after your death.

• How much other insurance you already have, for example through your employer.

Sometimes, it may be that you need a large amount but this may be unaffordable at this moment in time, in which case you may choose the highest level of cover you can, based on what you can afford.

There is no one right or wrong answer to this, and it is something we can guide you through to agree the most appropriate amount for your specific needs and circumstances.

Are life insurance premiums tax-deductible?

If you are paying the life insurance premiums yourself as an individual (as opposed to as an employer or business owner), no reliefs are available.

Are life insurance proceeds taxable?

When life insurance pays out - whether it’s a lump sum or an income - it is paid tax-free. However, depending on your personal circumstances, the payment may be subject to Inheritance Tax (IHT) if the plan is not set up in trust prior to your death.

It is advisable to place your life insurance policy into trust so that it stays outside your estate for IHT purposes. There are additional benefits to this, as it means your loved ones will receive the cash quicker as the pay-out won’t have to go through probate.

IHT is typically charged at 40% on any assets worth more than an individual’s or couple’s combined IHT allowance, so this is an important consideration when setting up your life insurance policy, or reviewing your existing policies.

Useful Critical Illness Insurance links from our Insurance Brokers:

• Money Helper Guide to Critical Illness Insurance.

• The Association of British Insurers (ABI).

• State Benefits: Statutory Sick Pay.

• Guide to Minimum Standards for Critical Illness Cover.

What is the difference between Critical Illness Cover and Income Protection Insurance?

Critical illness insurance pays out a cash lump sum if you're diagnosed with, or undergo surgery for a serious illness such as cancer, heart surgery or loss of a limb. It is designed to help support you and your family financially while you deal with your diagnosis, allowing you to focus on recovery. As it’s paid as a lump sum it makes it very flexible - some people will put it into a savings account and use it to top up their income each month; some will use the lump sum to adapt their home following their diagnosis.

Income protection insurance pays out a regular income if you can’t work because of illness or injury and continues until you retire or are able to return to work. It covers most illnesses that leave you unable to work, either in the short or long term. As it’s paid as an income, it provides certainty of that level of oncome continuing until you no longer need it.

For most people looking to protect themselves and their loved ones in these circumstances, the best level of cover is to have both types of insurance in place. However, depending on what you are able to afford, you may choose to prioritise one over the other. Whatever your circumstances, we can help you with this important decision.

What does critical illness insurance cover?

All critical illness policies cover three core conditions:

• Cancer

• Heart Attack

• Stroke

Each insurance provider's critical illness insurance will be different and certain types of these illnesses may not be covered or different definitions may apply, so you should check the policy information. Types of conditions covered include the following - but please bear in mind this list is not definitive:

We’re often asked if critical illness insurance covers pre-existing conditions. This will depend on the condition, how long ago you had it, how long it lasted, and its severity, amongst other factors. The insurance provider will typically assess this on a case-by-case basis so it’s always worth asking the question during the application stage.

What does critical illness insurance not cover?

Some causes of critical illness may be excluded from policies where it’s clear that the activity could directly impact a person’s health. The number and type of exclusions vary between providers, but some examples may include:

• Alcohol and drug abuse

• Hazardous sports and pastimes

• Unreasonable failure to follow medical advice

It’s important to ask providers what exclusions are in their policies and to read through these carefully.

How much critical illness cover do I need?

The amount of critical illness insurance someone needs is a very personal consideration and can be based on numerous factors, such as:

• How much your outstanding mortgage and any other debts are worth.

• How much money you feel you would need to help support you and your family financially while you deal with your diagnosis and recovery.

• How much other insurance you already have, for example through your employer.

Sometimes, it may be that you need a large amount but this may be unaffordable at this moment in time, in which case you may choose the highest level of cover you can, based on what you can afford.

There is no one right or wrong answer to this, and it is something we can guide you through to agree the most appropriate amount for your specific needs and circumstances.

How much does critical illness insurance cost?

This will depend on how much cover you need, how long you need the cover to last, your age, your occupation, if you smoke and any other health factors. It will also vary by provider. Critical illness is generally more expensive than life insurance because it has a much higher claim rate. This is because the chance of a person suffering a critical illness are relatively high:

• Research by Cancer Research UK reveals that 1 in 2 people born after 1960 will be diagnosed with some form of cancer during their lifetime.

• Though there are more than 200 types of cancer, just four types – breast, prostate, lung and bowel – account for more than half (53%) of all new cases in the UK. 

• 4 in 10 (42%) cancer cases in the UK each year are linked to lifestyle factors.

• Cancer represents 65% of all critical illness claims.

Are critical illness insurance premiums tax-deductible?

If you are paying the insurance premiums yourself as an individual (as opposed to as an employer or business owner), no reliefs are available.

Are critical illness insurance pay outs taxable?

When critical illness insurance pays out, it is paid tax-free.

Is critical illness insurance worth it?

In 2018 the Association of British Insurers (ABI) published the new Guide to Minimum Standards for Critical Illness Cover. The review was one of the most comprehensive to date and has seen the Guide redesigned to ensure greater clarity and understanding for consumers when comparing critical illness products. The new Guide includes an enhanced minimum standard definition in several areas, and other changes to definitions reflecting the evolution of medical understanding and treatment for a number of serious illnesses.

The majority of critical illness claims are made successfully every year - typically over 90%. This demonstrates these plans work for the people who need them.

One of our own Financial Advisers, Louise Baughan, has first-hand experience of suffering from cancer and claiming on a critical illness insurance policy.

Useful Income Protection Insurance links from our Insurance Brokers:

• Money Helper Guide to Income Protection Insurance.

• The Association of British Insurers (ABI).

• State Benefits: Statutory Sick Pay.

• State Benefits: Universal Credit.

What does income protection insurance cover?

Income protection insurance pays out a regular income if you can’t work because of illness or injury and continues until you retire or are able to return to work. It covers most illnesses that leave you unable to work, either in the short or long term.

There are different types of income protection insurance, but most fall into one of two categories:

• Individual Income Protection is taken out by a person seeking to protect their income in the event of being unable to work due to illness or injury. You pay the premiums yourself and if you make a claim, the insurer pays the benefit after a pre-agreed waiting period directly to you, free of tax.

• Employer-provided Income Protection Insurance (or Group Income Protection) is a policy taken out by your employer (for all their employees) to protect your income if you are unable to work due to illness or injury. Your employer pays the premium and if you make a claim, the insurer pays the benefit after a pre-agreed waiting period to your employer, who will in turn pay to you via their payroll system with a deduction for income tax (but not National Insurance contributions).

We are often asked if income protection insurance covers redundancy. Some policies do and some don’t, so it’s important to check the details of a provider’s products right at the start. This is an area we can help with as we will spend time discussing your specific needs and circumstances to understand exactly what type of cover you require, before finding the right product to meet your needs.

Why do I need income protection insurance?

More and more people are finding themselves off work due to illness or injury. Each year, over 1 million workers in the UK are unable to work. And it’s not just about being off work, it’s the length of absence that can really impact your finances. According to Legal and General, on average, a UK employee has enough savings to last just 32 days if their income stopped.

How would you cope financially if it happened to you? Whether you are single and self-reliant, or if have a spouse/partner, or children or any other dependants, if illness would mean you couldn’t pay the bills, you should consider income protection insurance.

This is especially important if you’re self-employed or you’re employed and your employer doesn’t offer sick pay above the statutory levels (known as Statutory Sick Pay).

How much income protection insurance do I need?

How much is paid out in the event of you being unable to work due to illness or injury is typically calculated as a percentage of your earnings. For most providers, this is worked out as follows:

• 65% of the first £15,000 of your earnings before tax, plus;

• 55% of your remaining earnings before tax above £15,000.

• With an overall maximum of £250,000 a year (£20,833.33 a month).

How long does income protection insurance last?

Income protection insurance will continue to pay out until you are able to return to work or until you retire. In determining whether you are able to return to work, one of the key considerations for the insurance provider is what definition has been used in relation to your job.

The most comprehensive level of cover includes the definition of ‘own occupation’ in relation to your job. Taking out an income protection policy that includes this definition of incapacity means that your plan will pay out should you suffer sickness or injury that prevents you working in your own occupation, as opposed to any occupation.

How much does income protection insurance cost?

This will depend on how much cover you need, how long you need the cover to last, your age, your occupation, if you smoke and any other health factors. It will also vary by insurance provider. Income protection insurance is generally more expensive than life insurance because it has a much higher claim rate. This is because the chance of a person being unable to work due to illness or injury is typically very high - according to the ABI, one million workers a year find themselves unable to work due to a serious illness or injury.

Are income protection insurance payments tax-deductible?

If you are paying the insurance premiums yourself as an individual (as opposed to as an employer or business owner), no reliefs are available.

Where a policy is provided by your employer and/or where the premiums are paid by your employer, the premiums are usually a tax-deductible business expense for the employer.

Is income protection insurance a taxable benefit?

Income Protection pay outs are typically tax-free. For personal policies where you pay the premiums yourself, income protection pay outs are tax-free.

Where a policy is provided by your employer and/or where the premiums are paid by your employer, the premiums are usually a tax-deductible business expense and when the policy pays out, the amounts received are taxed as your income.

Does income protection insurance affect benefits?

If you make a claim for Universal Credit and you are in receipt of income protection payments, this will affect the amount of state benefits you will receive. Income protection is treated as 'unearned income’; for every £1 of income you receive in unearned income, your maximum Universal Credit payment will be reduced by £1.