Back to basics: life insurance key part of financial planning
By Kirsten Hastings, 1 Sep 17
IHT planning, nil rate bands and replacing pension scheme death benefits are some of the reasons life insurance needs to remain a core part of financial planning, according to Chris Lean, a chartered financial planner with Aisa International. Click through the slides below to see six key reasons advisers need to speak to clients about ensuring they are protected.
Many thousands of people with deferred occupational pension benefits will have had up to four times their salary as death in service benefits while they were employed. Once they move on, however, the cover stops and is often not replaced.
For those with deferred pensions in defined benefit (DB) schemes the pension payable upon the death of a deferred member to the spouse is usually 50% to 67% of the accrued pension.
People might choose to transfer these pensions so that the cash equivalent transfer value and future growth is available to the family, believing this to be more important than the pension guaranteed.
However, for a large proportion of these cases, moving benefits from a final salary scheme is going to mean a reduced income in retirement and additional risks and costs.
In the majority of cases, it would be far more cost effective to maintain the final salary scheme benefits and purchase a simple life policy. Thus ensuring the shorter-term needs of the family are catered for, as well as the longer term needs at retirement.
Tags: Aisa Group | IHT | Nil Rate Band | Pension
