Jims Story. . Continued. .
So let’s recap…. Jim has Mortgage protection cover for himself and his partner that he took out years ago when he got a mortgage. He has had two children since he last looked at his family’s financial protection. His mind was focused on reviewing his cover when a work colleague gets ill and he decides to review his family’s protection.
After discussing and reviewing Jim’s personal circumstances, we were able to discuss how much Life and Serious Illness cover Jim should consider. He had a tight budget so we were limited in how much cover we could setup. We first worked out how much cover Jim would ideally like to have and then we started to try and fit this cover into his budget.
Ideally, Jim wanted to have this cover for at least 20 years, so that his children would be adults (not so dependent on Jim) by the time the cover ceases. He also wanted to have the same amount of Life and Serious Illness cover to protect his family if he died or was struck down with a serious Illness.
The term of the plan affects the cost of the cover. In Jim’s case, he wanted to keep as much cover as possible at the start, so we reduced his cover term from 20 years, to 10 years. But we chose an option on the policy that gave him the option to extend the term of the plan if he wanted to, during the 10 year life of the plan.
Life cover is cheaper than Serious Illness cover, so we were able to keep the amount of Life cover that Jim wanted. The premium was still a bit higher than Jim had originally budgeted so Jim had two options. He could either reduce his serious illness cover a bit or increase his budget to match the cover he wanted.
I also discussed the same kind of cover with Jim’s wife, Clarice, who looked after the children while Jim was at work. Neither of the couple had factored in the cost to the family (childcare) if something was to happen to Clarice.
In the end, Jim and his wife had an understanding of where their family would be, financially, if either of them died, or if either of them suffered a specified serious Illness. Since we had spent time going through the different aspects of the cover, both had a much greater understanding of the cost and more importantly the value of the cover.
They were both so happy with the outcome of our meeting, they asked would I come back and help them find and review some Pension plans they had from different employment throughout the years. That is a story for another day . . .