Everything You Need to Know About Life Insurance

[00:00:00] Carla: We are Google’s number one baby and toddler directory. We cover everything from pregnancy to preschool and we are home to over 8, 000 business listings. Join over 160, 000 parents using our website each month and you can find your local groups, classes, services and support in your local area. At My Bump 2 Baby, we love to support local communities, local parents and local businesses too.
[00:00:36] If you are looking for pregnancy to preschool businesses, or your local expert, financial advisor, family law solicitor, estate agent or accountant, visit www.mybump2baby.com.
[00:01:04] Hello and welcome to My Bump 2 Baby Expert podcast, where we bring experts from all over the UK. To answer your questions on everything pregnancy to preschool.
[00:01:27] Today I am speaking with Emma Day from Crystal Clear Financial Planning and today we’re going to be talking all about life insurance because it is so important for families. So if you’ve got any questions around life insurance, you want to listen to this episode. Hopefully it will give you all the information you need.
[00:01:51] Hello everybody and welcome to the My Bump 2 Baby Expert podcast. Today, we are talking all about a very, very important topic, life insurance. And today I have Emma Day with me from Crystal Clear Financial Planning. Hello, Emma. How are you?
[00:02:09] Emma: I’m not too bad, thank you. Full of cold, but not too bad. How are you?
[00:02:12] Carla: Yes, I’m good. I’ve got a little bit of a cold. I’ve got the end tail, the tail end of it. End tail of it. Tail end of it. So it’s just, I know when we were just actually saying we’ve got little ones, haven’t we? And so we’re always ill.
[00:02:24] Emma: Yes, get those nursery bugs coming home weekly.
[00:02:28] Carla: Oh, I know, they’re always there.
[00:02:29] I know, exactly. So, Emma, can you introduce yourself first of all?
[00:02:34] Emma: Yep, okay. So, my name’s Emma Day. I’m a Mortgage and Protection Advisor. And when I say protection, it’s in relation to insurance products and family protection. Um, so I look at ways of making sure that your family as a whole and yourself are covered.
[00:02:52] You know, against any kind of detrimental events that may happen in life. And I also, um, advise and apply for mortgages for people. So residential mortgages, buy to lets, um, and any specialist mortgages that people may be looking for.
[00:03:07] Carla: That’s brilliant. Thank you so much for sharing that, Emma. Um, so we’re going to talk today mainly around insurance, because I do think a lot of parents seem to, the word financial or insurance or protection, it’s like, Oh, you know, it can scare people, but it doesn’t need to.
[00:03:23] And to be honest, what’s more scary is actually the amount of people walking around without insurance and they’ve got a family. I mean, we insure our car, our pets, but you know, the most important people, we don’t actually insure.
[00:03:37] Emma: Exactly. No, you’re absolutely right. I mean, we’d be more interested in insuring our phone than we would insuring that our family’s got a good quality of life, if the main income earners, um, were no longer here or terminally ill or unable to work for any reason. Um, we just don’t know what life’s going to throw at us. And to have an insurance policy, I think it’s quite reassuring. Um, you know, we insure our homes, but we don’t assume that something terrible is going to happen.
[00:04:04] Carla: Yeah, exactly. I think, um, that’s it. And, and with My Bump 2 Baby, that’s why we work with, um, protection advisors, because at the end of the day, you know, your family is the most important thing. And it is just about protecting yourself and your family that if something did happen, like you said, Emma, you can still have a quality of life.
[00:04:24] It’s really, really important. So today, um, we’re going to talk about life insurance as I’ve mentioned. So first of all, Emma, would you mind sharing the benefits of life insurance?
[00:04:34] Emma: Yeah, okay, so a life insurance policy is, in the most simplest terms, it’s insuring your life. So if you’re to, um, be diagnosed with a terminal illness or pass away, your family would receive a payout because you’re no longer here.
[00:04:50] Life insurance is one of the I would say one of the most basic insurances that most people do have a need for. As an insurance advisor, I would look for those needs. So it is based on each individual person’s circumstances, but there is normally a need for life insurance. And the policy is normally used to protect a or cover a debt or financial obligation.
[00:05:17] Um, a lot of people do assume that it’s only when you have a mortgage, you have life insurance, which is not the case at all. Because you could be renting a property and have children or people that depend on you. They still need somewhere to live, so that life insurance policy will just cover, um, any day to day running costs that you may have.
[00:05:38] With life insurance, it’s normally paid out in a lump sum amount to your beneficiaries, which you would choose. And some policies do come with additional benefits, such as healthcare services that allow you, yourself and your family to remain fit and healthy. So there are some added bonuses to some, um, insurers.
[00:05:57] Carla: Yeah, that makes sense. That makes sense. I mean, the thing is, the reason why we advise to speak with someone like yourself, Emma, is because people can go online. And, do you know, I’ve seen first hand people that think they’re covered for things, and they’re not, and they’ve almost paid into something, and it’s not covered them.
[00:06:15] So it’s a double edged kind of sword, isn’t it, really? Yeah. Because you’ve paid money, and you’re not covered, so it’s really important to have that conversation. with somebody who can understand your own circumstances. Um, we believe that, um, and obviously there’s lots of different types of insurance as well.
[00:06:32] So, so what, um, I wanted to ask is a little bit about income protection as well, because that that’s really important too.
[00:06:40] Emma: Yeah, definitely. I mean, just to hit on a point you mentioned that some people go online and will kind of normally go for the cheapest option available to them, which isn’t always the correct option.
[00:06:51] You can also financially put your family at a detriment in choosing the wrong policy. It’s something that I will speak about later on in the podcast about putting a policy into trust. But depending on the amount of insurance, um, that’s going to be paid out to you or payout that will be paid out to you, you could put, make your family liable for inheritance tax.
[00:07:15] So this is why it is really important to speak to an advisor, but sorry, going back over to um,
[00:07:21] Carla: Yeah, don’t worry. It’s useful to know because I think people sometimes think, Oh, it’s just easier to do it online. Actually, you know, at the end of the day, you’ve had qualifications. You’ve got that, um, that special advice that you can offer.
[00:07:34] So it’s really worth speaking to somebody.
[00:07:37] Emma: Absolutely. We’ll move over to income protection.
[00:07:39] Carla: Yes. Income protection. Yes.
[00:07:42] Emma: Yes, so that’s a policy, um, which pays out if you’re unable to earn, um, an income. And, you know, earning an income is the, the foundation of all of us living. You know, we can’t live for free, so it’s a very important policy.
[00:07:57] Um, income protection is similar to how the furlough payments worked when we, we all went through the COVID period. It pays out a monthly income to replace some of your loss of earnings, and it is also tax free. So it won’t always cover the full amount of your earnings, because the, the tax has already been, well, in essence, been deducted from it.
[00:08:20] You’re not paying tax on it. The policies cover, um, for any illnesses or injuries where you’re not able to work. It’s a very good policy. It’s a policy which can be classed as a permanent policy because if you make a claim, providing that you’re not making claims back to back, you could wait a certain amount of time depending on the insurer’s terms and conditions and then you can reclaim again.
[00:08:46] So the policy will always remain in the background, providing that you’re paying the monthly payments. It’s not just a one, you know, you can claim it once and then that’s it. It cancels. It’s continuous.
[00:08:59] Carla: That’s really useful. That’s useful to know. So can that work for both employed people and self employed people?
[00:09:06] Emma: Absolutely. Yes. Yeah, definitely. So with self employed people and self employed people, all we would ask for is to show proof of what their, um, earnings are, what their income is. With self employed, we may just ask for a little bit more because when you’re self employed, it can fluctuate slightly, but something in the form of a tax return, um, showing what your yearly income would be, would be sufficient.
[00:09:33] Carla: That’s great. That’s brilliant to know. Um, so also then would this kind of cover if you were ill as well, or is that a separate, is that life insurance?
[00:09:44] Emma: No, so income protection covers you for any illness or injury. So it is a very, very good policy. Um, on the flip side, you have a critical illness policy, which covers you just for some illnesses, not all illnesses, whereas income protection is more of a complete policy.
[00:10:05] Carla: That’s great. Okay, that’s brilliant. So, so for a parent listening to this, when is the best time to actually take out a protection policy?
[00:10:14] Emma: Okay, I would say as soon as possible. Um, with any protection policies, the earlier you take it out, so the younger you are and the healthier you are, the better it is for yourself and for your pocket because it’s cheaper.
[00:10:28] Um, you know, sometimes people will wait until they’ve had an illness or a family member’s had an illness. Then they start to think, Oh, maybe I should be covered. And that’s when the premiums can start to raise slightly because you’ve got a historic evidence of illness, either within yourself or your family.
[00:10:47] So the sooner the better. Any time that you have any kind of financial obligation is a time when a protection policy should be considered.
[00:10:57] Carla: That’s great. And, and with the protection policy, is there any with no end date then, um, so that it can pay out when a policyholder passes away?
[00:11:09] Emma: Yeah, definitely. So that’s called whole of life and a whole of life policy is exactly how it sounds.
[00:11:15] It covers the whole of your life. Whether you were to pass away at the age of 50 or at the age of 100, um, and that’s a set policy. So if you’re to insure yourself up to 200, 000, when you pass away, you’re beneficiary, so your family would receive that 200, 000.
[00:11:35] Carla: Wow, that’s really useful to know. It is. Are there, I mean, I assume there are benefits of, of putting a protection policy into a trust.
[00:11:46] Can you tell us a little bit about what they are?
[00:11:49] Emma: Yeah, that’s fine. So I touched upon this when we spoke about life insurance a moment ago. Yeah. Putting a policy into trust means that it protects it against the, um, the taxation of inheritance tax, which has been in the news quite a bit recently. And inheritance tax is a tax that’s put upon you by the government, and it taxes your estate.
[00:12:11] So anything that you own, when you pass away, they will look at the, the value of that estate and say, is this taxable? Is this not taxable? By putting a policy into trust, it takes that out of your estate. So it’s not taxable. Um, there’s a few really good benefits of putting a policy into trust. The main benefit is it makes sure the money goes to the right people at the right time.
[00:12:38] It also allows you to have faster payments. So when somebody passes away and they’re assets need to be divided. It needs to go through probate, which can take some time because the income, well, because the policy wouldn’t would be in a trust as soon as that person passes away, you can put in a claim and it can be paid out immediately.
[00:13:01] You wouldn’t need to wait for probate to go through.
[00:13:05] Carla: That’s brilliant. Right. Okay. And, um, Emma, if someone wants a protection quote from you, could you tell us a little bit about how does that cost anything or how much does it cost to set up a policy?
[00:13:19] Emma: Yeah. Okay. So to set up a policy is absolutely free of charge.
[00:13:23] There’s no cost at all. Um, and the reason for that is that we get paid a commission from the insurer. So we don’t need to charge the client anything. Um, it’s also something that we’re very passionate about and believe that people should have good access to. So there’s no cost and it’s a free, no obligation meeting, very friendly, just to see what your needs are, or if you currently have a policy in place, review that policy and say, yes, that’s great.
[00:13:55] Keep that as it is, or let’s review this and see if I can provide a better policy for you.
[00:14:02] Carla: That’s great. Yeah, because I think it’s definitely worth reviewing your policy, because circumstances change. Um, you know, you might move to a bigger house, you might have a different job, you might have had another child and you want to up it a little bit, so it’s definitely worth, worth doing that.
[00:14:16] Um, now, is there any other ways that someone could protect their family against hard times?
[00:14:22] Emma: Yes, okay, so there are multiple other ways, and this is something that we would go through when having a protection meeting, just to make sure all the boxes are ticked. And it’s always a recommendation, it’s not a, you have to take this out, it’s just advice.
[00:14:39] Yeah. Um, but some of the other ways are to make sure that you’ve got a will in place to state how you’d like your assets divided. It also speaks about guardianship which for most parents like myself it’s very important to know that if anything was to happen your child’s going to or children are going to be looked after and how you’d like them to be looked after.
[00:15:02] What um, financial support have they got and the will can dictate that. Um, another way is also to have a lasting power of attorney in place, um, and that’s somebody that could, um, speak on your behalf if you was unable to. So if you was incapacitated for any reason, um, somebody could speak on either your health matters or your financial matters.
[00:15:26] Um, and a lot of people don’t realize how important this is. Um, just as an example, if somebody had a mortgage. and they, you know, had an accident and wasn’t able to be mentally competent to make a decision on either a re mortgage or selling the property, the lasting power of attorney could stand in for them and make that decision, um, which helps.
[00:15:50] It’s, it’s another thing that just supports your family.
[00:15:54] Carla: That’s great. And I think a lot of people will be listening, listening to this with parents that, you know, are a bit older now. And, you know, it’s even a case of thinking for them, you know, if, if, you know, they got, they got to the point where they couldn’t make their own decisions.
[00:16:10] It might be worth speaking to parents about as well.
[00:16:14] Emma: Absolutely, it’s, family financial planning covers the whole family, whether you’ve got children, whether you haven’t, you’re a single person, you’re in a family, um, it, it covers the needs of everybody, because the worst thing that we find as advisors is when people come to us and say, this is a predicament I’m in, how can, I help be helped.
[00:16:37] And although we’re able to offer help, it is a lot harder to offer help when the event has already happened. It’s better to protect you against that event.
[00:16:48] Carla: Yeah, that makes sense. That makes sense. Yes. So Emma, could you tell people what else Crystal Clear Financial Planning can help with?
[00:16:58] Emma: Yes, okay. So, um, at Crystal Clear, we provide, we’re mortgage and protection advisors.
[00:17:05] We also have a sister company called, um, Chrysalis Wealth, who are specialists in wealth management, who cover retirement planning, savings and investments. Um, so basically all of your financial needs should be covered by us. If I don’t specialise in a subject, I’ll be able to pass you over to a colleague who would be able to help you along the road.
[00:17:27] Carla: That’s brilliant. Thank you so much, Emma. And in terms of mortgages, um, what providers can you look at?
[00:17:35] Emma: So I’m a whole of market mortgage advisor. So a whole of market means that I look at the whole of the market. So I will look at your mainstream lenders. So the high street lenders that you may see as you’re walking down the street, um, that NatWest, Nationwide.
[00:17:52] I look at the non high street lenders, um, who only I would have access to. So as a Mortgage Advisor, we have a panel that will only provide mortgages through a Mortgage Advisor like myself. Um, so they’re the non high street lenders and we also look at specialist lenders and a specialist lender is somebody that may specialise in either a certain type of person if you have poor credit, um, if, if there’s any kind of tweaks to your credit history that may have been, may be of concern that a high street lender wouldn’t accept you for. And it also covers buildings, different types of buildings. So if you was to buy a cottage with a thatched roof, for instance, or a property with a lot of land, um, you would go to a specialist lender for those, those types of mortgage needs.
[00:18:46] Carla: Oh, that’s great to know because obviously with, with parents, often it means that a house move is, is imminent really. So that’s really useful to know. Emma, what we’ll do is we’ll pop your details underneath this podcast. So anyone that wants to speak to Emma directly, you can call her directly, email her, and also go through the website, whichever works best for you guys.
[00:19:07] Thank you so much.
[00:19:09] Emma: Perfect. Thank you very much. Thank you for having me.
[00:19:12] Carla: Thank you.
[00:19:16] Thank you for listening to today’s episode of My Bump 2 Baby’s Expert Podcast. If you would like to get in touch with Emma, you can find her details and Crystal Clear’s details at the bottom of this podcast. Thank you for listening. My Bump 2 Baby is one of the UK’s leading parenting platforms. You can find local pregnancy to preschool groups, classes and lessons wherever you are in the UK.
[00:19:47] Not only that, but you can read our honest reviews on the latest products, days out and services that you as parents need to know about. We also work with trusted financial advisors, family law solicitors and now estate agents too. If you would like to find your nearest trusted expert, head over to www. mybump2baby.com