Archive for the ‘General’ Category

Have You Discussed Your Family’s Finances?

Tuesday, January 19th, 2016

Have You Discussed Your Family's Finances-

Whilst it is easy to be naïve about the eventuality of old age, retirement is an inevitability for everyone.

If you wish to avoid paying high levels of tax and ensure your finances are correctly distributed among the members of your family retirement planning is a crucial step that should not be overlooked.

Even for those who understand the importance of pension planning, research has suggested that as many as 20% of couples over the age of 40 have never discussed their pensions with 49% have no idea about the level of retirement income they can expect once they stop working.

Why is it Important to Discuss Family Finances?

These figures are worrying, especially since families have become increasingly interdependent. Furthermore with the recent shake up to personal and state pensions (new pension freedoms were announced in 2014 and a new flat rate state pension will come into force this April) there is even more reason to discuss your plans for later life to ensure your partner and family receive the correct inheritance once you pass.

Despite these changes to pensions however, research also suggests that there is a reluctance for couples to visit a financial adviser to discuss retirement planning, with nearly two thirds having never met with one as a couple.

What Has Changed in Retirement Planning?

Traditionally retirement planning has focused on the needs of an individual, or a couple. However as families become increasingly interdependent, the situation has become more complicated as people need to factor in siblings, adult children or even parents into their financial plans.

Why Should You Discuss Your Will with Your Family?

One of the key areas that can cause confusion, or even disagreements following the death of a loved one is the Will. By speaking to a financial adviser to draw up a Will, and then discussing your intentions beforehand you will decrease the chance of upsetting arguments when it comes to distributing your estate after you are gone.

For those who have not set up a Will then it is time to stop putting it off. As many as 84% of 18-34 year olds and more surprisingly as many as 35% of over 55s are thought to not have a Will in the UK.

If you pass away without a Will you are considered to have died Intestate and specific rules apply. These rules changed on 1st October 2014 with the main beneficiary of these changes being your surviving spouse/civil partner.

Consider the Tax Implications of Inheritance

If you are planning to leave an inheritance to members of your family it is important to consider the most tax efficient way to do this to ensure that your loved ones do not lose much of your gift.

It can also be a good idea to consider the requirements of your children or younger generations. Attitudes to inheritance have changed in recent years with some younger relatives preferring their older family members fully enjoying retirement rather than struggling in order to leave something behind.

For those already at retirement, you may have already had the all-important family discussion and come to the conclusion that your family will not require as much in inheritance as you originally thought. This information could change your attitude to retirement, perhaps making you consider equity release or other retirement options.

Discuss Your Finances with Family and Advisers

It is understandable that you find the discussion of finances after your death a difficult subject to approach with your spouse, partner or family. However understanding the intentions of those around you is incredibly important.

Coupled with this you should seek professional financial advice from someone who can help you plan both your retirement and passing to ensure your money and assets are properly taken care of.

If you are wishing to speak to someone about pensions, retirement or financial planning please do not hesitate to contact Maxim Wealth Management today on 0141 764 0040 (Glasgow) or 0203 841 9941 (London). Alternatively you can fill in our Contact Form and one of our team will get back to you.

Will You Be A Silver Entrepreneur?

Friday, July 10th, 2015

silverRetirement isn’t what it used to be. A century ago, when old age pensions were first introduced, life expectancy was far lower than it is today.

After a life of hard manual work, most people of retirement age had approximately five years to savour the meagre entitlements available, before shuffling off this mortal coil aged, on average, 52.

The future for retirees today could not be more different, the years that follow the end of a working life are no longer counted in single digits but normally, decades.

For many, their retirements are a time of new opportunities when a lifetime of prudence and investment in pension pots pays off.

With the advent of new pension freedoms enabling savers to draw down large lump sums from their pensions without large tax penalties, it might be possible for a generation of ‘silver entrepreneurs’ to emerge.

According to the Daily Mail, a tenth of retirees are now considering taking the plunge and setting up small businesses with their nest eggs and on average, the size of the pot they can draw from is £550,000.

This suggests that the desire to ‘start a business using my pension’, is widespread amongst retirees.

A lifetime of expertise

Ending a career at 55 or 65 has often meant abandoning a lifetime of knowledge and expertise acquired in a valuable and important field.

With new opportunities to ‘use my pension to invest in a business’ opening to entrepreneurial pensioners, these skills no longer have to go to waste.

It might be that in retirement you can establish the type of small business or consultancy that you had always dreamt of, one which is not necessarily based on your work.

Some retirees, used to a life of frenetic activity in business, have found doing nothing in retirement frustrating and there is growing evidence that simply ‘giving up’ at 65 is very bad for mental and physical health.

Getting Advice

Even though many retirees might have had successful business careers, the prospect of cashing in up to a quarter of an entire pension pot in one go to set up a small business can be daunting.

Firstly, any investment is a risk, even if you think the business idea is sound and likely to work. Taking a risk when you are 35 is a different proposition to taking one when you are 65.

This means that, not only should you not gamble more than you can afford to lose (not that you can really ‘afford’ to lose any pension at all), but seeking professional business and investment advice is essential.

Many people who have worked in law, finance, engineering or other key professions or trades might have managed throughout their career to have successfully avoided ever creating a business plan or cash flow forecast.

Most local authorities run free business courses, which are always worthwhile investing your time in, but getting expert independent financial advice on your new business is also important.

Making the business as tax efficient as possible, ensuring that the right kinds of personal and professional insurance, or public liability insurance is purchased at as cheap a price as possible – these are the types of issues that a trained advisor can give you some guidance on.
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How to teach your children about money

Wednesday, July 8th, 2015

How To Teach Your Children About Money

Will The Next Budget Be Radical?

Friday, July 3rd, 2015

budgetOn 8th July 2015, George Osborne will deliver the first completely Conservative budget since Kenneth Clarke in 1996.

Given that George Osborne delivered his last budget on 18th March 2015, you could well we asking yourself “Why do we need another budget now?” The answer is essentially that the last budget was a combined Conservative Liberal Democrat budget.

This time around the Tories are working to their own agenda. The more cynical may also note that the Labour party lost its former shadow chancellor, Ed Balls, in the last election. This may make it more difficult for them to respond effectively to the Tory proposals.

The speed with which this budget is being announced has led to it being termed an “emergency budget”. Will it, however, be a radical budget?

Getting The UK Back Into The Black

The Conservatives have made a pledge to get the UK out of debt. To do this, they need to make spending cuts and encourage growth.

There have been various suggestions as to where spending cuts could be made. The Queen’s Speech included a reference to the removal of housing benefit for those aged 18 to 21.

David Cameron has also indicated support for a reduction in the benefits cap. This currently stands at £26,000 p.a., but could be reduced to £23,000 p.a.

Pensioners Are Likely To Be Protected

The Conservatives pledged to retain the triple-lock system.

This means that the state pension will rise in line with average earnings, inflation or 2.5%, whichever is the highest.

On the other hand, higher earners are likely to see a reduction in the pension tax relief available to them.

Housing Is A Key Area

The Conservatives believe that reducing pension tax relief for higher earners will counterbalance increasing the Inheritance Tax threshold.

They have pledged to raise this from £325,000 to £1 million. While this may seem like a large increase, it’s worth remembering that the current limit was introduced in 2009. Since then rising house prices have made Inheritance Tax a fact of life (or death) for a growing number of people.

This rise is an attempt to focus the effect of the tax on the highest earners. It will leave those on lower incomes with more money to spend, which may encourage growth.

To help people to get on the housing ladder in the first place, the Conservatives plan to introduce a “Help to Buy ISA”. This will only be available to first-time buyers.

In short, the government will add a 25% top-up to deposits made, up to a maximum of £3,000. In other words, if you save £12,000 yourself, you will get £3,000 from the government.

If you plan to buy as part of a couple, then both parties can have one each. This means that a couple could potentially have their deposits boosted by £6,000.

A Budget For Working People?

The personal allowance for Income Tax currently stands at £10,600. Under the coalition budget, it was due to rise to £11,000 in the financial year 2016/2017.

The Conservatives have pledged to raise it immediately to £12,500. Similarly they promised to raise the starting rate for the 40% tax bracket from £42,385 to £50,000. Obviously this means less money for the treasury, hence the need for spending cuts.

The Conservatives hope, however, that giving individuals more money in their pocket will help to boost the economy through growth.

So What Does This All Mean?

In simple terms, the effect of the budget will only be fully realized once it is implemented. In its general principles, it is arguably broadly similar to the coalition budget.

This is hardly surprising given that the Conservatives were by far the bigger party in the partnership. Whether the differences can be considered radical is largely a matter of opinion.

So You’ve Found The House, How Soon Can You Move In?

Friday, April 24th, 2015

Move copyWhile having an offer on a house accepted may be a cause for celebration, it is actually a fairly early point in the procedure for buying a property. Here is a summary of the steps to complete before you pick up your keys.

Organize a Solicitor

You may be able to find a solicitor before you have an offer accepted, but the solicitor will only be able to help you once they know what specific property you want to buy. Their job is to check out the property thoroughly from a legal perspective and see if there are any potential issues of which you need to be aware.

Organize a Surveyor

There are two types of survey which can be carried out on a property. One is a valuation survey and the other is a property survey. In very simple terms, the valuation survey is to ensure that the price of the property is reasonable given the amount of the mortgage you have requested. In other words, the surveyor will only do enough to check that the mortgage lender is assuming a reasonable risk. A property survey is a much more extensive survey, which aims to identify any potential physical issues with the property. Property surveys are divided into three types. Home condition surveys are the most basic level of property survey. They cover the key aspects of the property and highlight any major issues. A home-buyer’s report goes into more detail, checking the property both internally and externally. A building or structural survey is the most detailed form of report.

Finalising the Offer and Confirming the Mortgage

Although these are two separate steps, they are very much interdependent. In a best case scenario, the property will be given a complete bill of health by both the solicitor and the surveyor(s). The sellers will still be happy with the offer and the mortgage lender will be happy with the valuation. If this is the case, then you can proceed to the next step – if you want to. It’s important to note that this stage is effectively the point of no return for both parties. Up until contracts are exchanged either party, seller or buyer, can back out. Once contracts are exchanged, if either party pulls out they could quite feasibly be faced with penalties.

If there are any issues identified with the purchase as it has been agreed, then these will need to be resolved or the purchase abandoned. Fortunately it may well be possible to resolve issues provided that there is communication between all relevant parties. If the issues have a financial impact, e.g. the surveyor identifies an issue which requires repair, then the sellers may be persuaded to accept a lower offer. Alternatively if the valuation comes in at less than the agreed sale price, sellers may also agree to a reduced price. Quite simply getting a mortgage is a necessity for many house purchases and only when this stage has been completed can buyers and sellers move on to the next step.

Exchanging Contracts

Pretty much what it says. Obviously buyers need to go through the contract thoroughly with their solicitor. You need to be absolutely sure you understand everything and are completely happy with it. In particular you need to be clear about what is and is not included in the sale. Once you have signed the contract you are committed to the purchase.

Completion and Paying Fees

Completion essentially means registering the sale with the relevant authority (this varies according to the specific part of the country where the sale was made). It also means paying the cost of the house and the money due to the parties involved in the sale. It may also mean paying stamp duty.

A Guide to Time-scales

In practice the shortest period of time in which to move from offer to completion would be around six weeks. This does, however assume, that everything is plain sailing and that all parties involved are working at maximum speed with no holidays (public or otherwise) or any other events (such as sickness or people changing jobs) to interrupt the process. Buyers should be prepared for the process to take longer and also be ready to keep tabs on the parties involved and check for progress when appropriate.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

How To Benefit From Low Oil Prices

Friday, April 10th, 2015

How To Benefit From Low Oil PricesAs the old saying goes – what goes up must come down. Recently oil prices have been coming down quite spectacularly. This has naturally raised the question of how investors can benefit from this. To answer this question, we need to understand why oil prices have fallen. There are essentially three theories on this.

Oil prices are being deliberately kept low

High oil prices encourage people to look for lower-cost alternatives. These include shale gas and coal. As oil prices drop, it becomes less attractive to extract other kinds of fuels. This is particularly true of shale gas as fracking is still highly controversial. One school of thought holds that oil-producing countries are prepared to take a short-term hit in terms of oil prices to stop alternative industries, such as shale gas, from gaining acceptance. Consequently as soon as the oil-producing countries are happy that they have eliminated the threat (for now at least), oil prices will rise again.

There is an excess supply of oil

High oil prices encourage oil production. If, however, there is an over-supply of oil, prices will fall. When this happens production is reduced until prices rise again. In an ideal world a continual cycle of rising and falling prices would be replaced by a balance between supply and demand. In the real world, however, demand for oil can vary hugely for a number of reasons. This makes it very difficult to strike this perfect balance.

There is reduced demand for oil

Another explanation is that weakened economies have a lower demand for oil. To put it another way, oil is essential for many purposes, but not all purposes are essential for daily life. For example oil prices feed into petrol prices. Petrol is used by the emergency services, which have to keep going day in day out and therefore have to buy petrol regardless of the cost. Petrol is also used for leisure travel, but people can reduce or cut out leisure travel if the cost of it becomes too high.

Energy costs are a matter of long-term strategy

The truth is that any or all of these explanations could explain the drop in oil prices. What some consumers may find harder to understand is why lower oil prices take so long to become lower petrol prices or heating bills or air tickets. In fact, some people may even see this delay as an example of “fat cat” profiteering. However very few oil-dependant companies are buying fuel now to use now. Large companies value stability as it enables them to create long-term business plans. They therefore engage in long-term supply contracts, which can result in them paying well above market prices for the fuel they need. (Of course, the reverse is also true). They may also choose to invest in oil-related companies so that they can benefit, in some way, from rising prices.

So how can individuals benefit from the oil market?

This is the key question and it is one which deserves serious consideration. It could also be worth thinking about the question of energy in more general terms. Regardless of what oil prices do in the short term, the reality is that oil is a finite resource (as are other fossil fuels). Because of this, we need to look at alternative sources of energy for the future. We also need to look at ways to use the resources we still have more effectively. Therefore investments which relate to either of the above could be well worth taking some time for to get professional advice from a qualified financial adviser.

How To Protect The Value Of Your Home

Wednesday, March 25th, 2015

How To Protect The Value Of Your HomeA decade ago, adding value to most properties was simplicity in itself, you simply bought a house and waited. This was during an unsustainable housing market boom that ended in an epic slump and it isn’t one we should be hoping for again anytime soon.

Protecting your home’s equity now takes more active involvement but home improvements needn’t be a complex, tortuous business if you follow a few simple rules.

Emotional buyers

After house hunters have considered their budget, they may choose the property that speaks to them on an emotional level.

People may buy based on how they feel, far more than they buy based on rational, logical thinking.

With this in mind, it is possible to create an attractive, sellable ambience in your home without spending a fortune.

First Impressions

Before house buyers see the interior of your home, they will see the garden, walk up the path and look at the windows and the front door.

All of these have the potential to kill a sale if they are in a poor state of upkeep, so it makes sense to start with some essential garden upkeep.

It might be a good idea to look at the exterior of your own home from the stand point of a potential buyer and think about what they might find appealing and what might be a potential turn off.

Decor

Some home owners believe that spending thousands on new bathrooms, conservatories, extensions and kitchens are the only way to add serious value to a home.

However, big spending home improvement projects eat into any profits you might make from a sale, so it is always a good idea to find cheaper, more effective ways of creating a fresh, bright, appealing atmosphere.

Firstly, de-clutter. You are in the business of creating a blank(ish) canvas that potential buyers can project their own personality on to. It’s hard to imagine living in a place that is full of someone else’s odds and ends.

Secondly a new coat of paint in neutral colours (don’t make any ‘loud’ statements when you are trying to sell) and some minimalist soft furnishings will make an enormous difference.

Jobs

What have you put off for months? How many leaky taps, dead light bulbs and half finished painting jobs are there around your home?

It goes without saying that you need to get these fixed if you don’t want buyers to assume you’re selling a cheap fixer-upper (they’ll still buy, but at fixer-upper prices).

The home you have lived in for years is your most valuable asset so it makes sense to maximise its value when you come to sell it. One piece of torn linoleum in the bathroom or a blocked gutter could cost you dearly.

Getting Help

It might be that DIY is not your strong suit, in which case, there is no shame in hiring an expert to help you with a few jobs.

2015 Budget Review

Friday, March 20th, 2015

FB - BudgetGeorge Osborne’s final budget before the election was in many respects an extended party election broadcast hyping the achievements of the past and holding out all sorts of promises for the future. So here’s what he’s got planned.

The State of the Economy

The big message was to convince voters that the economy is in safe hands with the Conservatives and that Labour would return the country to rack and ruin. He boasted of a Britain which is the fastest growing developed economy in the world at 2.6%, although that’s down from December’s forecast of 3%. GDP per capita was up 5%, employment was at record levels with 80% of those new jobs being full time and 80% skilled. Welfare bills were down, business investment was up and the north of England grew faster than the South.

It all played into his claim to be creating a recovery which benefited the whole country – not just London.

Finally he announced a sale of £13bn of assets in Northern Rock and Bradford and Bingley incurred by the bank bailout, which will be used to pay down debt. His message was simple: while Labour gave money to the bankers, the Conservatives were busy taking it back.

Taxes

Anyone who works for themselves knows the horror of those annual tax returns. Yesterday he killed off the tax return allowing people to access digital accounts and pay their bills off when they wanted.

This is not just about appealing to a key bunch of likely voters – it’s also about trying to haul in some of the mysterious missing income tax. Every year tax receipts are lower than expected. That’s either because people are being channelled into low paid jobs or because a certain amount of income is going missing.

By making it easier for self-employed people to pay their full share, he hopes tax receipts will be a little less disappointing in the future.

Once again the threshold beyond which people start paying tax is on the up. In 2015/16 it will rise to £10,800 and the year after that it will hit £11,000. Meanwhile the higher rate tax band will also pop up from £42,385 to £43,300. Corporation Tax will be cut to 20% in two weeks’ time.

Petrol duty is to be frozen with September’s planned increase scrapped in a move which he claimed would save people £10 every time they filled up.

Drinkers got their annual penny off a pint promise, while he cut 2p off whisky and cider and froze wine duty. Tobacco and gaming taxes remain unchanged and he also announced a new horse racing betting right.

Business

One of the biggest questions in the run up to the budget had been what he planned to do for the struggling North Sea oil industry. Plunging oil prices have seen major giants such as Shell and BP cut investment in this area, putting one of Britain’s key assets at risk.

He announced plenty of new measures for oil companies including a cut of the supplementary charge placed on oil producers from 30% to 20% and a new tax allowance to encourage investment in the area. The government will also be investing in seismic surveying to unlock hidden reserves of oil.

Another much hyped area received less attention than expected. Much has been made of the so-called Northern Powerhouse, with the Conservatives keen to show they are pushing more investment away from London. However, measures were a little vague. There was talk of more devolved powers to the regions, deal with Manchester Council to keep 100% of the money from the rise in business rates, a new rail franchise for the south west of England, reductions in the toll for the River Severn crossing from 2018 and a move to offer support for Wales and the Midlands.

There were also moves to get the financial services to pay more. Just as banks had benefited from public support during the crisis, he said, now it was only right and proper that they give something back. He announced the bank levy would rise to 0.21% which he argued would raise an extra £900 million in revenue. Tax avoiders also came into his cross hairs. A tax on diverted profits would target those multinationals which move their profits offshore

Pensions and Annuities

One of the most important announcements made today related to the pensions market. The changes that the government introduced to the pensions market in 2014, making annuities non-compulsory, will be extended by 2016.

George Osborne announced that pensioners who have already purchased annuities will be able to exchange them for cash, which will come as a further blow to shareholders of the already struggling annuities providers.

As of April next year, over five million annuity holders will be free of the restrictions that have forced them to keep their policies and will be able to sell the policy back to the provider.

Savers

The Chancellor announced more flexible ISAs. Anyone would be able to transfer money out of an ISA and back in without losing their tax-free allowance.

Lower rate tax payers will pay no tax on the first £1,000 of income earned through their savings while higher rate tax payers would pay nothing on the first £500 while pensioners would have more access to their annuities. The mantra is to increase help for savers and give them more power and more choice.

One of the big highlights, though, was the creation of a ‘help to buy ISA’ where the government promised to top up savings towards a deposit. For every £200 saved towards a deposit, the government promised to top it up with £50.

What was missing?

In his response to the Budget Speech Ed Miliband pointed out that there had been no mention of new investment into the NHS. Also missing in action was anything on the environment.

The Conservatives have long since dropped the slogan ‘vote blue, go green’, but this was a budget in which they tried to pretend climate change didn’t exist and people weren’t show to point that out.

No sooner had he sat down than #climate was trending on Twitter. Caroline Lucas, the Green Party MP, was quick to voice her discontent. “Just weeks after PM signs #climate pledge highlighting economic threat, not one mention of climate or carbon from Osborne #fail #budget2015.”

Instead this has been a budget designed for the Tories’ ground troops. It’s an attempt to convince those who might be worried about savings, their pensions and their income that there is light at the end of the tunnel.

This was, then, was an extremely political budget. Osborne tried to head off some of Labour’s major attacks by softening his line on public spending cuts and stealing Labour’s policy of reducing the lifetime pension cap from £1.25 million to £1million.

The speech was full of the usual slogans – such as Britain was “paying its way again”, “walking tall” or pinching a line from Bullseye by “staying in the black and out of the red”.

There was plenty for savers, pensioners and the self-employed.

When You Need Financial Advice

Friday, March 20th, 2015

When You Need Financial AdviceHuman beings, in general, are notoriously bad at calculating risk and weighing up reward, it’s almost hard wired into us.

Our survival, millennia ago, was based around our inability to think too much about the future and focus on ‘eating today’.

This, while useful hunting Mastodons, is less helpful when planning our financial futures and we may take key decisions in our lives without much thought to our finances.

This article will help explore some of the times when financial advice might make all the difference to our wealth and future happiness.

First Home

Before the 2008 crash, at the height of Britain’s property prices, the speed at which house purchase decisions were made reached epic proportions.

The availability of mortgages and other cheap credit in an economy based on an unsustainable housing boom resulted in countless first time buyers finding themselves, post crash, in negative equity.

Others found that when the ‘sweetheart deal’ mortgage rate they signed up to ended, their home became exceedingly expensive.

In both instances some financial advice might have prevented a lot of long term heartache.

The long term effect of negative equity or an expensive mortgage deal can be immense, being ‘trapped’ in your property that you can only sell at a loss or saddled with a huge mortgage obligation should be avoided at all costs.

You can often get mortgage advice from independent financial advisor as part of the overall cost of the loan you take out.

Marriage

People cringe at the thought of discussing money and finances along with the romantic side of tying the knot, but it is essential that you are realistic about the economics of marriage too.

Getting married, sharing a home, and potentially having children together means that life insurance, wills and inheritance and the ownership of shared assets all have to be considered.

Accessing financial advice is important at this point, as there are countless life insurance policies, critical illness covers, and other provisions to cover your individual needs to choose from.

Having an expert who can guide you towards the best deals might well save you money in the long run.

Divorce

Sadly, for many married couples, divorce too will be a significant milestone.

It goes without saying that during the complex and emotionally painful process of ending a marriage expert legal advice is necessary, but it is also important for both parties to have financial advice too.

You might experience a considerable decrease in your income as a result of divorce from your partner, or you might be the recipient of money in the divorce settlement.

You might be the partner who is obliged to pay out a large settlement, or the one who has most responsibility for ongoing child maintenance payments.

If you become the sole provider for any children from the marriage, you may need to consider your life insurance and critical illness cover.

You might already have these policies but they may need to be reviewed in order to reflect the value of any maintenance payments you receive.

A financial advisor can also offer guidance on the most effective way of investing any lump sum from the divorce so it continues to grow in value, and can be used to pay for education and university costs for your children, or add to your own retirement fund.

Some divorcing couples also need to disentangle their pensions and here a financial adviser can be invaluable.

Retirement

In savings terms, your retirement starts now.

Making sure we have an income that will sustain us after our working life is over is something that many people put off until their 30s or 40s, but the longer you leave it, the more costly it becomes.

If you are just starting out on the road to planning your retirement and you have no idea about what choices there are or what pension products to buy, getting some advice is a good place to start.

However, you might already have a portfolio of investments and a variety of pension pots that you have built up yourself.

In this case it might be important to find out whether you current pension providers or other investments are performing effectively, compared to the rest of the market.

A financial adviser will be able to give your portfolio an audit and suggest whether or not your money could be put to better use elsewhere.

Knowledge is wealth

The more expertise that is available to us, the better informed we are and the less likely we will be to make costly decisions that are not easily undone.

Financially, we only have so many options, money, and time, to spend investing it, so it is important not to rely on pot luck.

So if you have a significant milestone in your life fast approaching, you might find it useful to talk over your options with an advisor.

Don’t Leave It Too Long To Get Life Insurance

Friday, March 13th, 2015

Don't Leave It Too Long To Get Life InsuranceLife insurance can make the difference between people being able to focus on dealing with grief and people being forced to confront harsh financial realities at a hugely painful time. While the statistical likelihood of dying goes up with age, death claims even young lives. What that means in practice is that life insurance could very well be essential for anyone whose death could lead to financial hardship for people they love. In very simple terms, it’s too late to take out life insurance when you’re already dead. With that in mind here are some tips for arranging it.

Decide What Type of Cover You Need

Life insurance comes in two basic forms. Term Assurance provides cover for a set period. Whole of Life insurance, as its name suggests, will cover you until you die (assuming you fulfil the agreed conditions). In other words, Term assurance will only pay out if you die during the term of the policy. Whole of Life insurance is guaranteed to pay out at some point. It’s important to choose the right form of cover for your individual situation so this may be a good time to get some advice from a professional financial adviser.

Remember to review your level of cover

Change is a part of life and it needs to be incorporated into your financial planning. For example your first experience with life insurance may be when buying a home for the first time. On the other hand, when children come along their parents need to think about ensuring their family is provided for in the event of one or both of them dying. In this situation it may be suitable to obtain cover which increases over time to keep pace with inflation.

Home-makers need cover too

It’s easy to value earnings from employment, but it’s also important to remember the monetary value of home-making. You may need to think about child-care arrangements in the event of the death of the primary home-maker. You may also want to think about the value of the other tasks they perform such as cooking and cleaning.

Take action to make yourself an attractive customer

Nobody can stop the march of time, but we can take control of our lifestyles. Life insurance companies much prefer customers who are going to live to the end of the term or at least pay premiums for some years before they die. You can quite legitimately change your lifestyle and then either speak to your existing insurer or look for the best deal.

If you’re a smoker then by giving up you can add any savings you make on your life insurance to the savings you make on packets of cigarettes.

Make sure the payout method is effective

It would be rather ironic to go to the effort of arranging appropriate life insurance only to forget about making sure that the proceeds go to the right people in the right way. For those with a partner and children, the choice may be between leaving everything to the partner and entrusting them with the care of the children, or leaving the children money in their own right. This all depends on your own individual preferences and situation. In either case, however, writing the policy in trust can be a hugely helpful move for those left behind. In short it ring-fences the insurance payout from the process of probate, meaning that it can be accessed relatively quickly.

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