LIFESEARCH PRESS RELEASE
22 February 2008
A three-point Mother’s Day plan to protect the family finances
Protection specialists LifeSearch have drawn up a three-point plan that every mother should keep in mind to make sure the family finances stay healthy.
Mothers across the country will celebrate Mother’s Day on 2 March. While they receive the attention and appreciation they deserve, their value is often under-appreciated in other areas.
The findings from Legal & General’s last ‘Value of a Mum’ research found that the cost of replacing the work that mums do in the home is £24,456 per year, roughly the average UK annual salary. It also estimates the cost of bringing up children to age 18 is £122,859.
So, while cups of tea are made and cards given, there are also three simple steps a cautious mother can take to ensure her family are protected in the event that something were to happen to her that threatens the family’s financial security.
1 - Consider a policy that pays an income, not a lump sum
Not only can a regular income pay out more than a lump sum, but it can also be linked to the cost of school fees or home help. There are two main policies that offer a regular income:
Family Income Benefit (FIB) works the same way as a life policy but pays out a regular income from the point of claim until the end of the policy, rather than a lump sum. Potentially it can pay out more than double the amount of a lump sum and Life Cover is cheaper for women than for men (if their circumstances are similar).
Income Protection (IP) is the product that should be top of most people’s list, and the product that most people should be buying above life cover and ASU. Rather than paying out on death it pays out on illness that prevents you from working, something that is far more likely to happen, and replaces your salary. IP is also available to a houseperson not working or who work less than an average of 16 hours per week on a regular basis.
2 - Don’t rely on state benefits
Most people dramatically overestimate the amount of state aid they and their family will receive if they are taken ill or die. In fact, a 30-year-old woman earning £35,000 per month would only be entitled to Incapacity Benefit of £61.35 for the first 28 weeks*. That works out at £245.40 per month. She may also get sick pay from work, but when that runs out there would not be much left to maintain the family lifestyle.
However for just £24.80** per month (with Friends Provident) she could guarantee herself a monthly income of £1500, potentially until retirement at age 65.
3 - Take out single life cover, not joint life cover
Most people in a relationship make the mistake of assuming that they should be looking at a joint policy. Wrong. Although two single life policies cost a little bit more (typically 5-10%), they pay out twice, whereas a joint policy will only ever pay out once. Also if the couple split up, they can each take their own policy with them.
Matt Morris, LifeSearch Policy Adviser, says: “It is not just working women who should be thinking about protecting their finances. The value that mothers provide to the home through daily activities is massively underestimated. Unfortunately very few consumers actually realise the choices that are available to them and many either buy the wrong product or get a bad deal.
“Crucially, don’t wait till something happens before you look into protecting your finances. By then it may not be possible to be accepted by an insurer and the effects on family finances can be devastating.”
Comparison table
|
Client: 30-year-old female in good health, guaranteed monthly premiums |
Life Cover (lump sum £100,000 over 25 years) |
£5.97 – AEGON
|
FIB (Yearly income over 25 years for equivalent premium of £5.97) |
£7205 of income per year can be claimed. That’s £180,125 over term compared to £100,000 lump sum
|
Income Protection |
£24.80** - Friends Provident
|
Source: www.lifesearch.co.uk
Notes to Editors:
*Incapacity benefit will pay £61.35 for the first 28 weeks, £72.55 from weeks 29 to 52 and £81.35 from week 53 onwards, assuming you’re under state pension age. Sourced from www.direct.gov.uk. Income support, housing benefit and council tax benefit may also be able to be claimed.
**Quote based on female non-smoker in good health employed as an office manager, looking for monthly benefits of £1500 per month. Premiums are monthly, guaranteed and there is a 6 month deferred period. Source: www.lifesearch.co.uk
Enquiries
Kevin Carr, Head of Protection Strategy
Tel: 0207 065 1033 / 07887 838811
kevincarr@lifesearch.co.uk
Matt Morris, Policy Adviser
Tel: 0207 065 1020
mattmorris@lifesearch.co.uk
Consumers can contact LifeSearch on 0800 316 4242 or at www.lifesearch.co.uk
LifeSearch can source case studies where required and can provide tables of typical premiums.
The latest LifeSearch Protection Report (PR9) contains all the latest industry news and statistics, including new Critical Illness paid / declined claims figures and the latest stats on how much further Life Cover premiums have fallen this year. If you need a copy, please contact us.
About LifeSearch
With more than 200,000 customers, more than £13bn of cover arranged and over 40 awards and nominations LifeSearch is the UK's leading independent life insurance and protection specialist offering advice to consumers on life insurance, critical illness, income protection and family income benefit.
Established in 1997 by Tom Baigrie and Arthur Davies of London based Independent Financial Adviser Baigrie Davies, LifeSearch has offices in London, Milton Keynes and Leeds. The company currently employs around 150 people, of which approximately 50 are qualified advisers.
LifeSearch prides itself on the quality of advice and high levels of service it provides - always offering the most competitive quote possible based on a client's personal circumstances.
Through LifeSearchCare, LifeSearch is also the only intermediary to provide its clients with free support and counselling provided by RED ARC.
Recognition of the service the company provides is reflected in the number of positive customer feedback forms LifeSearch receives. Since launch, this figure is in excess of 10,000.
LifeSearch Limited is an Appointed Representative of Baigrie Davies and Company Limited, who are authorised and regulated by the Financial Services Authority.
