Life is too big a gamble not to have sufficient cover for the unknown

With Royal Ascot due next month, where some of the world’s finest race horses compete for prizes worth more than £6.8 million, the race through life can be just as exciting and unpredictable.

Whatever the outcome of the races, the preparation involved in producing such high calibre racehorses can be a long and tough journey and will include much planning, detail and expertise.

In just the same way financial planning includes planning, detail and expertise. It is ultimately about providing clients a clear vision to achieve their full financial promise, whatever the future may hold.

People at the start of their career are likely to have what can be referred to as a “portfolio of liabilities”. These liabilities could include a mortgage, children, school fees, university fees and a partner to support. We are obliged to manage the risk of having a motorcar because insurance is compulsory. We are not obliged to manage the risk of having these other liabilities but it is sensible financial planning to do so.

It is highly recommended to have critical illness insurance and life cover that would eliminate your biggest liabilities should you or your partner suffer a critical illness or die. Critical illness cover is designed to pay a lump sum on diagnosis of a life-threatening illness, such as cancer, heart attack or stroke.

Another recommendation would be to have sufficient life assurance if you or your partner die, so the surviving partner could still afford to bring up the children in the way that you would have done had you both been alive. This form of insurance is not expensive and it can pay out just like a salary, except there is no income tax to pay, from the date of death of the life assured until the end of the term of the policy.

It is also advisable to have a Salary Continuation Plan or Permanent Health Insurance arranged in the event that you are unable to work due to illness or injury after a deferred period (usually three or six months)., This will pay out a high percentage of your salary (not subject to income tax) provided you pay the premiums yourself.

Finally, it makes life far easier in the event of either your or your partner’s death if a Will is in place. If you put these foundations in place, grief can be limited to emotional grief reducing any financial grief. Without such insurances in place, there is little peace of mind to cover the unknown events through life.

While many enjoy a flutter at the races, it’s best to have all your options covered in life for as smooth a run to the finish as possible.

Philip Gauld is Financial Planning Manager at our Elgin office and can be contacted on 01343 233105

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