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Protection Policies: A Guide

Updated: Jun 16, 2022

Updated 16/6/22

With high inflation, interest rates on the rise and the cost of living increasing, a feeling of uncertainty exists amongst individuals, employees, investors and business owners in the UK.

Here we overview some types of protection insurance that are available that may help in uncertain times and others that may be of more general interest to you and your family.

It’s important to remember that protection policies aren’t right for everyone and should only be implemented following a thorough review of your particular circumstances.

Short Term Income Protection Insurance (STIP) replaces a proportion of your income for a fixed period of time (usually 12 or 24 months) should you temporarily be out of work due to accident, sickness or involuntary redundancy (assuming you were unaware of the possibility at the time of policy commencement). This should not be confused with Income Protection Insurance which will not cover redundancy.

Mortgage Payment Protection Insurance (MPPI) is often taken out when you buy a mortgage and begins to make your mortgage repayments three months after your earnings stop due to redundancy, usually for a period of 12 months.

Income Protection Insurance (IPI) is designed to cover a proportion of the income you lose if you are unable to work due to an accident or serious illness. Income is paid until the end of the policy term or when you are able to return to work and you can choose how long after your accident or serious illness it starts to pay out.

Critical Illness Protection As the name suggests, this type of cover pays out a lump sum when critical illness is diagnosed (but doesn’t cover accident or injury).

Life Assurance is probably the most well known form of protection available and usually only covers death. It provides a sum to your dependants if you die.

Business Protection If a key member of staff dies or is seriously ill, Key Person Cover provides a financial safety net, allowing the company to continue trading as

normally as they can. Employing Life Cover can offer a death-in-service benefit to its employees.

Businesses can use Share & Partnership Protection to allow a remaining partner to keep control of the company if one dies or is critically ill.

Next Steps

Contact us if you’d like to arrange a review of your protection needs. Following a review, we can put a robust protection plan in place, if necessary.

This article was written by Culverhouse Financial Planning Limited.

The article outlines just some of the things you could consider in relation to protection insurance. It does not represent financial advice. If you would like personalised financial advice please contact a financial adviser.

Remember that the value of investments can fall as well as rise and past performance is not a guide to future performance.

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