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Why do you need financial protection?


Why do you need to think about financial protection?

• 1 person every 2 minutes suffers a heart attack in the UK (British Heart Foundation)
• 2.5m people suffer from chronic back pain every day of the year (National Statistics online)
• 1 in 3 people will be diagnosed with cancer during their lifetime (National Statistics online)
• Stroke is the largest single cause of severe disability in England and Wales (The Stroke Association)
• In the UK as many as one in five workers are suffering high levels of work-related stress (Health & Safety Executive)

What options are available?


Life insurance : pays out a lump sum if you die or are diagnosed with a terminal illness

Critical illness insurance : pays out a tax-free lump sum if you are diagnosed with a critical illness

Life or critical illness cover : pays out a tax-free lump sum or income if you die, have a terminal illness or if you are diagnosed with one of a number of critical illnesses

Income protection (also known as permanent health insurance): pays out a regular tax-free income if you are unable to work because of illness or injury

Income cover for unemployment : pays out an income, for up to two years if you become unemployed

How should I go about buying cover?


It is usually in your best interest to employ the services of an independent financial adviser (IFA). They will be able to explain the differences between the different insurance policies available and help you to decide which one is most appropriate to your needs.

You can choose to pay an IFA by fee, but more commonly insurers pay them commission for arranging the cover. There is usually little difference in the price you pay for protection cover between fee or commission-based advisers.

Some advisers will recommend products from the whole market - others may only recommend products from a limited range or from a single company (advisers are known as tied, multi-tied or whole of market).

Useful sources of information:


British Insurance Brokers Association
Consumer advice on insurance issues

Financial Ombudsman Service
Can help with complaints about life and health protection insurance

Financial Services Authority (Consumer Information)
Consumer helpline: 0845 606 1234

IFA Promotion
Contact details for financial advisers across the UK
Tel: 0800 085 3250

Personal Finance Society
Contact details for financial advisers across the UK


David Sawers, Deputy Editor, Health Insurance and Protection


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