Jim's Story continues...September 2013

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 . . .

Jim's Story....August 2013

Jim’s story . . .

Jim took out a Mortgage Protection policy with his wife when they took out his mortgage. At the time, Jim only took the cover out because it was a requirement from the bank for him to get their mortgage approved. He wasn’t even sure exactly what cover it provided himself and his wife.

Jim wants to review his existing cover because one of his work colleagues has battled with cancer and it focused his mind on his own circumstances. We sat down and discussed his existing Mortgage Protection cover to make sure that he understood where his family would be financially in the event of the death of either partner. In short, the Mortgage protection policy would cover most (if not all) of the outstanding mortgage.

Since Jim took out this Life cover he had welcomed 2 children into his family. It hadn’t occurred to Jim how this important change in family circumstances might require having a look at the level of cover he was providing for his family until his work colleague got very sick.

As it stood, if Jim or his partner died, they would own their house. Great, so the family owns the house, but what now? If Jim dies, his partner will either have to quit work to look after the children or possibly pay somebody to look after them.  What are the costs in doing either of these things? Where do they get the money to be able to afford the time with the children or the cost of childcare?

If Jim dies, he is the main income earner, but who looks after the children? How much will it cost? What if Jim wants to take time out to bereave the death of his partner (and spend more time with his children during this tough transitional period)? Can he afford to do this?

Jim hates the thought of even considering life without his partner and his partner does not like to think of how the family would struggle financially without Jim. However, they both accept that one way or another, if one of them died, the family would not only lose a loved one, they would be at a financial loss that they needed to acknowledge.

This is a very hard step to take. To try and put a value on a family member or a partner is not particularly something any of us want to think about, after all no amount of money can replace a loved one. Whether a person has younger dependants or is on their own, the loss of a partner will very likely have a financial impact on their lives.

Jim’s story continues next month. .