INSURANCE & WILLS

 

While many divorcees put insurance and wills to the bottom of their in-box, many regret that decision later.

You are likely going through a full financial reset, and the details are vital. Many forget the number of  ties that need to be re-assessed if not severed entirely. You, your dependents and your credit score can suffer if something is missed.

 

Our apologies if the following seems obvious, but as many people reading this will be arranging their first insurance after separation, we have tried to be thorough.

 

 

VITAL THINGS TO KNOW

 

1. Insurance and protection are the same thing, the only difference is marketing.

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   2. There is no benefit in being a loyal customer. 

An insurance policy is not a rainy-day fund; it is more like an umbrella you are renting. Once you stop a policy there is no payout, and the best policy is always the one that provides you with the cover you need for the lowest monthly cost.

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    3. The best protection is entirely dependent on the person it is protecting. Getting the right protection is like packing for a camping trip, too much or too little is no good.

 

    4. Your insurance should be entirely tailored to your existing cover, situation and what you have to protect.

 

 

TYPES OF INSURANCE

 

There are 5 main policies to consider when divorcing

 

1. BUILDINGS AND CONTENTS 

 

Simply insuring your property. Most mortgage providers insist on a buildings policy being in place before they will release any funds to you, so be prepared.

You are insuring against Major Loss, structural coverage, and possession loss / damage. Additional benefits are, old for new replacement, alternative accommodation in emergencies, liability / legal cover and emergency assistance.

The cheapest policies will get you the most basic cover, while the better options will cost more.

If you are willing to pay a higher excess, i.e. the first £300 or £400 of any claim, your monthly premium will be lower.

 

COST: Entirely dependent on the property and your possessions, but rarely below £20 a month. 

 

 

     2. LIFE INSURANCE  (also called life assurance, life cover or indemnity protection)

 

A policy that provides a lump sum payout to nominated beneficiaries if the policyholder dies during the policy term. It offers financial protection in the event of death, helping to cover expenses, maintain a standard of living, and potentially pay off debts. It is most often used to pay off an outstanding mortgage, giving your beneficiaries a mortgage free home should the worst happen.

 

COST: While heavily dependent on age, health, cover amount and career, it can cost less than £9 a month.

 

BENEFITS: Aside from the payout, the insurance companies have a vested interest in your health, often giving you offers on gyms, fitness equipment, apple watches and even discounts on coffee and hotel bookings. The best thing they usually do is give you free 24/7 telephone access to a doctor for you and your children.

 

NOTE 1 - The most cost-effective policies are 'decreasing' policies; these reduce the payout to keep in line with your mortgage as it is paid off, saving a huge amount of money.

 

NOTE 2 - PLEASE be sure to put your policy into a trust. This will not only speed up the payout from several months to a few days but will also ensure there is no risk of inheritance tax being charged to your beneficiaries. There is never an extra charge and we can arrange it for free.

 

 

     3. INCOME PROTECTION 

 

A policy that pays out a regular monthly figure if you become unable to work due to illness, injury or redundancy. It aims to replace all or some of your regular earnings, helping you cover bills and other expenses while you focus on recovery and job-searching.

 

COST: The two main factors are 1. How much you need per month and 2. How long you are able to wait after employment ceases before payments need to kick in. This can be fine-tuned to complement and not duplicate any workplace cover you are already entitled to. As a rough guide, £2500 a month for up to 12 months with a 3-month wait will cost around £20 a month. 

 

BENEFITS: It is a scary thing to contemplate but imagine how long you could keep the bills paid if you were made jobless tomorrow.     

• Statutory sick pay is £118.75 a week. It stops after 28 weeks.

 

 

     4. CRITICAL ILLNESS COVER 

 

A type of insurance that provides a lump sum payout if you are diagnosed with a serious illness or undergo a surgical procedure related to a critical illness. While this covers major injuries like car accidents, the vast majority of claims are due to strokes, heart attacks and cancer, which together affect around 600,000 people a year in the UK.

If covered, the payout can be used for any purpose. Beyond keeping the lights on and paying the mortgage it can be used to cover extra medical expenses, home help or modifications; all allowing you to focus on your health and recovery.

 

COST: While dependent on age, health, cover amount and career, Critical illness cover usually costs around £25 a month.

 

BENEFITS: The average payout for Critical Illness claims is just under £70,000, and is tax free.

 

 

     5. WILLS

 

Not to put too fine a point on it, when you are going through a separation, you need to re-assess your Will; doubly so if children are involved. 

While defining who will inherit what is important, selecting and officially stating the desired guardian of your children is arguably even more important. 

Without a clear guardianship established, children run the risk of being put into care until a judge selects a suitable guardian, which can take months.

 

COST: A very basic but professionally written and recorded Will starts at around £250, although complexities can increase that.

 

BENEFITS: Peace of mind. When someone dies without an official Will they are termed 'intestate', which means the government will decide your wishes, likely leading to family disputes, delays, and financial hardship for dependents, especially unmarried partners and children. Loved ones can be left with unexpected funeral and legal costs, adding to the emotional strain.

 

NOTE - For Wills we can assess your needs but will then pass you on to a suitable Will writing expert. For a free consultation please click HERE

 

If you need a free, professional assessment of your insurance, or brand-new cover, we have access to every major provider at the best rates available and will ensure you have the correct cover with nothing overlapping. Pick a diary time for a free chat HERE

 

This would not be a sales call, just a chance to let you know all your options.