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Under 40? Here are three insurance options you may want to consider

Updated: Feb 20, 2023

In life, nothing is certain apart from death and taxes. A famous man once said that and maybe he was onto something.

Whilst we cannot predict the future, you can make sure are protected should the worst happen. Insurance is there to safeguard our finances. There are many insurance options. It can be difficult to know which one is right for you. But Reeves Independent are here to help you decipher which is best for you and your family. Here are four options you may wish to consider.

1. Life Insurance

There are many great benefits to life insurance, but perhaps the best its ability to cover your funeral expenses and provide for those loved ones you leave behind. Speaking of your family, you can leave a legacy for them as whole-of-life insurance can cover your Inheritance Tax Bill you expect recipients to receive upon your death.

If your family is reliant on your salary to pay bills, experts suggest you will need a policy that covers 10 times your yearly wage. Not everyone can afford that, so it is good to discuss the best options for you with an adviser.

The two traditional types of life insurance are ‘whole life’ and ‘lifetime’. Whole life can be used as an income device as well as an insurance method. It will pay you until you die as long as you continue to pay the premiums.

2. Income Protection

Research as revealed that a large portion of workers could make massive savings now by taking out cover, rather than waiting for a lifestyle event to occur.

According to LV, since the COVID-19 pandemic, 8,000,000 uninsured adults aged between 25-44 are now considering income protection. Despite that, 19% of 25–44-year-olds without this cover say they have never heard of income protection insurance, with 14% unaware of life assurance. Don’t be one of those people who think they are too young to protect their income. Illness and death can occur at any time, so make sure you are protected.

Family income benefits can pay out a regular monthly income. The maximum cover for income protection is around 55-60% of earnings, but this is tax-free which is a boost. For a large section of workers, it is not only feasible to pay less for an extended period of cover by taking out a policy at a younger age, but also means the plan is less likely to contain exclusions.

3. Can you answer the following questions?

If you become ill, will statutory sick pay cover you and your family?

At just £96.35 a week, this is most likely to be lower than your usual salary. In this event, you mat want to consider an income protection policy so that you can continue to pay your bills in the event of accident or illness.

Should the worse happen, does your work cover death in service?

Some employers, even though not required by law, will provide a benefit called Death in Service. If you die whilst on their payroll, an elected beneficiary will receive a lump sum, which is often two-to-four times the amount of your salary but varies by employer.

This is an employee benefit, whereas life insurance is a separate policy arranged by yourself to pay out a cash sum if you die during the time of your policy.

We never know what is around the corner. Serious illness or death can strike at any time. It is essential you can cover your bills and ensure you and your family are protected. You need to make sure you have adequate insurance in place. You could lock in lower rates by taking out a policy at a younger age with fixed premiums. Therefore, you could make significant savings and benefit from the protection of the policy for a longer period of time, including fewer medical exclusions if it is taken out when you are young, fit and healthy.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.

This article is for general information only and does not constitute advice.

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