Personal Financial Planning
TERM ASSURANCE The simplest and usually the cheapest form of life assurance. We would recommend these policies for those with limited funds looking for maximum cover.
LEVEL TERM ASSURANCE Term assurance is an insurance that pays out a tax-free lump sum on the death of the assured, during the period of the term. Level simply means that the sum assured remains the same during the term of the plan. They have no investment element.For many people, this is the first most cost-effective life assurance they consider. In Jersey, should you pay tax, the premium is liable for tax relief.
DECREASING TERM ASSURANCE This is more generally known as "Mortgage Protection". Again, a very cost-effective contract, specifically designed to decrease with a capital and repayment mortgage. The sum assured and the term, match that of the loan.
In Jersey, should you pay tax, the premium is liable for tax relief.
RENEWABLE TERM ASSURANCE This contract is generally used for Keyman/Share Partnership assurance. Terms are usually 3 or 5 years, after that period, the contract may be renewed for a further term with no further underwriting. At the renewal point there will be a premium increase based purely on age. This provides a cheap contract with flexibility.
CONVERTIBLE TERM ASSURANCE Adding this benefit allows for the contract to be changed during its term, into either an endowment or a whole of life plan, with no further underwriting.
FAMILY INCOME BENEFIT POLICY This is a form of a decreasing term assurance. It provides on the event of your death, an annual amount, paid until the end of the term. This contract is most often used for protecting school fees or maintenance payments. The term should reflect the period the children will be in education. A similar concept should be used in calculating the level of cover and term of the maintenance requirements. It is cheaper than a level term contract as the amount paid out on the death of a partner is only for the remaining term of the plan. You can include an inflation factor so that the policy retains its true value.
WHOLE OF LIFE ASSURANCE STANDARD CONTRACT Whole of life means that once the contract is underwritten, it continues until you no longer need it. These contracts have a cash value. Generally the sum assured and the premium remain the same through the life of the policy.
WHOLE OF LIFE ASSURANCE MAXIMUM CONTRACT This contract is similar in design to the above. Its main difference being that for a smaller premium, the sum assured drops from its maximum level after ten years to a considerably lower level. At the ten year point, the client can elect to pay a higher premium to maintain the level of cover or keeping the premium the same allow the sum assured to reduce. This contract also has a cash value but this is generally lower than the standard version. This contract was designed for a client with limited funds, yet needing a high level of cover for a ten-year period, with the option to keep the policy until no longer needed. Mostly chosen for family cover.
CRITICAL ILLNESS COVER This contract pays out a lump sum on the diagnosis and survival, after a period of time, usually a month, of a critical illness. The list of illnesses is quite comprehensive but the most basic cover can be surmised as; cancer, stroke, heart attack, major organ transplant, severe coronary artery disease, multiple sclerosis, permanent disability and kidney failure. Comprehensive cover offers a much larger range of illnesses. Critical illness cover can be provided in most forms of policies described under life assurance e.g. term assurance etc.
Death is not usually covered unless added as a combined life policy.
This contract does not attract tax relief on the premium under current Jersey tax legislation.
What would be the effect financially, on your lifestyle, should you or your partner suffer a heart attack or contract cancer?
INCOME PROTECTION These contracts, should an accident or illness prevent you from earning, pay a monthly income, after a deferred period up until the point you return to work or retirement.
The level of cover depends upon; age, sex, occupation, income, deferred period and retirement age. Companies have different ways of calculating what should be paid, anywhere from 50% to 75% of your net relevant earnings. Should an accident occur and you can never work again, it would be paid until your chosen retirement age.
Choosing to be paid after 6 months as opposed to 3 months would reduce the cost. Choosing an earlier retirement age or level of benefit also reduces cost. Income protection does not pay out in the event of redundancy.There is choice between guaranteed and reviewable premiums.An indexation option is available to reflect inflation.
What would happen to your income should you have an accident or illness that prevents you from working and how would that effect your family?
PERSONAL PENSIONS These tax efficient policies are designed to build up a fund, which at retirement age will be used to buy an annuity. That is, a guaranteed income for the rest of your life.
It has become apparent that due to an increasing population in retirement, who are now due to medical science living longer, the burden on the state to provide an income in retirement is becoming too great. Most people now fundamentally understand that a private pension is a necessity that cannot be ignored or delayed.
The two main providers for a Jersey Personal Pension are Eagle Star and Norwich Union. Both are recognised as Top performers in this field
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