A tip on how to provide more protection for your loved ones, for less

How would you like to protect your family and your business for less money than you are currently paying out? I thought so. Read on to find out how…

Getting more for less – sounds like a bit of a trick doesn’t it?

There is a trick involved, but it’s not about getting more for less – it’s about getting less for more!

This is the trick played out by life insurance companies when they ask people to pay far more in premiums than they need to.

I have known about this trick for over 30 years. During all this time, I’ve refused to be fooled by it and refused to allow my clients to overpay for insurance policies.

But this “trick” continues to be implemented by incompetent or lazy salespeople, rather than explain the realities of proper protection.  Would you be happy to find out that your hard earned money is being wasted in this way and that the life insurance companies are effectively “stealing” extra money from people who place faith in such respectable institutions – people like you, your family and friends.

It is decent hard working people who are its victims; people who could do with a bit of extra money every month rather than boost the coffers of the life insurance companies. Well, I think it’s time these decent hard working people are told the truth about making proper provision for their family or business.

Many people are paying almost double for their protection policies

Take a couple who are both 39 and want to provide £350,000 of protection for their family over the next 20 years. They need to provide this amount as they have a large mortgage and two young children.

There are a variety of ways to create these protection arrangements. If you go to a life insurance company they will ask you to pay something like £45.28 per month (assuming you are both in good health). You might naively assume that when you pay for insurance you are paying a fair amount of premium for a given level of risk. Often however the life insurance companies rig the deck and ensure that the way in which the policy is sold favours them not you.

Protection arrangements should always be for YOUR benefit. Not the life insurance company’s benefit. To ensure this is the case, you should consider a range of options. You could arrange for your total protection values to equal £350,000 on a minimal cost basis. This would mean that you would both only pay a combined amount of around £25 per month. Or you could double the amount of protection for your family for a little less than £4 per month extra of the £45.28 quoted by the life insurance company.

(For the avoidance of doubt my comparison of the different costs are all from one life insurance company.)

As you can see if you are interested in protecting your family then surely you would be interested in such a large increase of additional protection for such a small extra cost.

However the costs and benefits are only one factor to consider when arranging protection, the other factor is speed with which monies can be paid out.

As the cost of protection has fallen by around 30% over the past 3 years, what action have you taken, did you increase your level of cover by 30% and pay the same money or did you maintain the level of protection and save money?

Many people are unaware that the costs of protection has dropped in recent years, it is possible for you to review your existing protection arrangements and take out new policies for less than your currently paying. It may mean moving to a new company (as some companies have reduced premiums more than others).

In addition there are some innovative offerings by some of the companies, a few now offer free critical illness for children if the parent takes out a critical illness policy. That means a great deal for some people – it is not very often that a life insurance company gives something away!

It does pay to review your arrangements on a regular basis to take advantage of reduced costs and special offers.

If you were to die, would you want your loved ones to have to wait six months or more for the benefits from your policy? Or would you like them to receive the benefits almost immediately?

Asking how long you’d like your loved ones to wait to get your money after your death might sound like a silly question. Yet life insurance companies, rather than use plain English, write policies in all manner of complex jargon and technical terms that confuse the hell out of people. For example, they will often state that they need to admit age, when what they actually mean is you must prove your ownership of the policy by providing an original birth certificate before they pay money out. This is a term that can cause all manner of confusion.

Let me ask you another silly question, would you rather find birth certificates at the time the policy is arranged or would you prefer to leave this until death occurs (leaving your family to scrabble around looking for it at a time when you are attempting to cope with your loss)?

Taking care of this simple administration procedure now means you are leaving the life insurance companies with no excuse to hang onto the money any longer than they have to (unless the policy falls into the probate of your estate) …

Bonus tip – how to avoid the probate trap AND enable policy proceeds to be paid out tax free

If you write your protection policy in trust it will not be liable to tax. That means you can be assured that you won’t be caught up in the estate administration process and your family will receive the full amount of the life insurance value.

In conclusion almost every client that I see has inadequate (or simply wrong) protection arrangements. Protection should be first and foremost in people’s minds – particularly when it is possible to often dramatically improve protection for the family for so little.

Ray Best can help you protect your financial future. To find out more, simply click here!


About Ray L Best

Ray Best has had over 30 years experience of advising on complex financial matters. A published author of a number of books including “Partnership and Shareholder Protection”, Inheritance Tax Simplified”. We provide an initial meeting at no cost and only engage with clients when we can add significant value.

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