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This Government pension initiative begins with the largest firms in the UK, from 1st October 2012 and will be rolled out to all companies, depending on their size, over the next 5 years.
Critical illness cover pays out a cash lump sum on diagnosis of one of a specified number of critical illnesses, e.g. invasive cancer, stroke, heart attack. In some cases, a reduced amount may be payable for some critical illnesses where the likelihood of death is very low, e.g. minor cancers. It is common to be included as part of a life assurance policy rather being a standalone contract. Under 65s are 5 times more likely to suffer a critical illness than to die.
Income protection insurance is a long term policy that pays a regular weekly or monthly income when the insured becomes unable to work because of a long term illness or incapacity. As long as the insured keeps paying the premiums and complies with the conditions, the insurer cannot cancel the policy or increase the premiums, regardless of how many claims are made.
Term assurance pays out a cash lump sum on death if it occurs during the term of the policy. After the term expires, cover will cease. There is no savings element to this type of plan and there is no value if the plan was to be surrendered. Typically, this is considered to be the cheapest form of life cover available.
Renewable term assurance is similar to regular term assurance but gives the opportunity to continue the policy regardless of your state of health at the end of the initial term and without having to provide any evidence to the insurance company. The guaranteed renewability provides a degree of security as the individual will not be left uninsured at the end of the term. Premium rates will likely increase each time the option to renew is exercised.
A whole of life policy is a long term insurance policy designed to pay out a cash lump sum on death whenever that occurs. Whole of life plans can contain a savings element and may accrue a cash value over time, although in the early years this may be very low. Some policies offer no surrender value as this allows premiums to be lower. Premium levels are usually reviewed every 10 years although there is no limit to how long the policy can last.
Corporate insurance is also known as Key Man insurance. Key man insurance uses normal insurance policies to protect the company against the financial loss that might result if key people die or get seriously ill. The sum assured is paid to the business.
Shareholder protection is an insurance policy put in place to protect a company’s shareholders. This policy will pay out a lump sum upon a shareholders death to allow all the remaining shareholders to purchase the remaining shares and avoid any unsuitable persons from inheriting or buying the shares. It also means the deceased shareholder’s family is looked after.
A SIPP is a personal pension scheme that has a much wider choice than the traditional personal pension in investments and also in taking the benefits. A SIPP can invest directly in compliant shares or can be used to purchase commercial property. In, addition a SIPP is permitted to borrow money.
SSASs are defined contribution occupational pension schemes aimed at company directors and senior employers. A SSAS must have no more than 12 members and each of them can be trustees. A SSAS can invest in a wider range of investment than a personal pension and include commercial property, land, shares and commodities.
A discretionary fund manager is a professional third party manager who invests a clients capital based on various criteria including risk profile, ethics etc. Many financial planners will outsource some of their investment process to discretionary fund managers to ensure that they receive the maximum amount of attention and expertise available.
Advisers who achieve Chartered Financial Planner status are now widely recognised as having achieved the gold standard for the financial advisory profession and clearly demonstrate a commitment to professionalism. As at the end of 2015, the 'Chartered Financial Planner' title is now held by more than 22,000 individuals (source: Chartered Insurance Institute), and it remains the premier title for financial advice professionals.
Phased Retirement is the process of ‘crystallising’ a pension fund in phases, rather than securing income at once through the likes of an annuity. This means that only a part of the pension fund is converted in to income each year and normally the tax free sums will be utilised in the early years. This can create a highly tax efficient income stream while the remaining fund remains invested and can benefit from growth.
Income Drawdown allows you to take income from your pension fund while the
fund remains invested and continues to benefit from any fund growth. You
generally need a larger fund value to take pension income drawdown. There are two types of Pension Income Drawdown,
A lifetime annuity is an income contract bought from an insurance company in return for the payment of a lump sum of money. The amount of income that can be provided will depend on the size of the fund and the annuity rates available. The annuity rate itself will depend on the individual’s age, health, sex and the options selected (i.e. spouses or dependant’s pension, guarantee periods or escalation of the benefits in payment.)
The advice and/or guidance contained within this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.
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