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PROTECTION
Life Cover
Where an adult has dependents i.e. people who rely on
him/her financially then there is a life cover need. Sometimes
more appropriately called death cover, it is designed
to replace the income of the deceased person or to repay
loans, thereby avoiding financial hardship to the dependents.
The three main types of cover are Level Term Assurance, Decreasing Term Assurance (usually for loan protection) and Family Income Benefit.
As a rule of thumb, to arrive at a sensible amount of death cover, from a salary earner’s gross annual income you should deduct any annual outgoings for things such as loans that would be repaid, and any other expenditure that would cease on death. The amount of cover should be roughly 25 times this net figure.
Critical Illness Cover
This form of protection usually provides a sum assured
as a lump sum on the first diagnosis of a specified list
of critical illnesses, and enables the policyholder to
(hopefully) recover from the illness without being under
any financial pressure without it you might survive, but
your financial situation may not! A sensible level of
cover should be around 5 times annual gross salary plus
any unprotected loans.
Continued >>
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Protection
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