08 May 2008
Keeping up with the times
How much do you notice inflation? While you probably pay attention to whether your income is keeping pace with it, you should also consider your life and health cover.
These covers will often be designed with replacement of your current income in mind. It is therefore important that they are regularly reviewed and kept up to date.
For example, if you put in place life cover of £100,000 five years ago, then to maintain the same purchasing power now, you would need just over £117,500 of protection (the RPI has increased by 17.7% between November 2003 and November 2007, according to the Office of National Statistics). If your earnings have grown faster than inflation over the last five years, then the necessary increase would be even higher.
Inflation is not the only factor that needs to be considered when reviewing your protection:
• Have your family circumstances changed? A larger family may mean your cover needs to rise, regardless of inflation.
• Has your employment changed? A new job will often mean higher income that needs to be protected. It could also come with different health and pension provisions – which might make a review of these areas a sensible idea.
• Have your borrowings increased? You may have remortgaged or taken out new personal loans. Usually any increase in debt should be matched with increased protection to cover payment in the event of illness or death.
• Can equivalent cover be replaced at less cost or enhanced with no additional outlay? Competition between insurers in the protection market is intense, something that we may be able to exploit to your advantage.
If you want to make sure your protection is up to date, why not contact us for a review? Even if no changes are needed, at least you will know that your protection is at the right level – for now.
For further information
contact Paul Tobias, Trust & Investment Department on
01483 887766.