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Please note that articles on this site & any other 'planning-approval' related web site does not constitute professional advice. All articles are intended to provide a general view of many subjects. We suggest you to consult a solicitor before making any important decisions.  The author is not an expert in any given field.

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don't leave it to chance  I  Health insurance

Don't leave it to chance - talk before it's too late. Here's the dilemma - should you pay for something that you know you have absolutely no chance of ever directly benefiting from? The logical answer is 'No'. However, if we said that the money was to pay for life cover, would that change your reply? Only you know the answer to this, but in many cases people would still say 'No'.

Excuses, apathy or both - The two most common reasons given by people without any life cover or insufficient levels of cover are that they can't afford it or they don't need it. However, almost all of us need life cover, regardless of how wealthy we are. The simple fact is that most of us live up to our means. Therefore, the more we have, the more we have to lose! As for the argument that it is not affordable - well, in most cases we can't afford not to have it. In reality, the true reason for individuals not having enough life cover is apathy.

Financial hardship - It is estimated that many families have no life cover or are under-insured, putting dependents in a potentially very vulnerable position. Couples with families (especially young families) have the most need for life cover. If the main wage earner dies and has no protection or insufficient cover in place for the remaining members of the family, then severe financial hardship could be just around the corner.


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Who will pay the bills? - Even if the mortgage is fully protected, the family will still require an income following the death of a breadwinner. They will still need to pay the household bills and find money for family holidays, running the family car, school fees and the usual day-to-day living expenses. Would any of us really want our loved ones to take a dramatic reduction in lifestyle for the sake of a few pounds a day? So, looking at it logically, if we can find the money to pay for our car, and our contents and building insurance, then does it not make sense that we should find the money to protect the one asset that funds everything else - our own life? The Financial Services Authority does not regulate some types of protection policies.

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It's just a matter of trust - Many people believe that trusts are only used by the seriously wealthy, who have complicated financial affairs. However, this is not necessarily the case.As more of the population see the value of their estates increase, fuelled by the rise in property prices, there is now an even greater need for you to plan for inheritance tax (IHT) and look at your tax affairs. Your inaction could mean a 40% tax bill payable on the value of your estate in excess of the 'nil' rate band (£255,000 for 2003/04). So it is in this area that trusts can come into their own, with many IHT planning packages built around them. So what are the most common trusts?

Absolute Trusts, or Bare Trusts - The beneficiaries are named in the trust deed or will. They have the right to income and capital immediately and, as soon as they are 18, they have the power to demand the contents of the trust from the trustees. The beneficiaries and their shares cannot be changed.

Accumulation and Maintenance Trusts - These are trusts for children. They are discretionary trusts with preferential treatment for inheritance tax purposes. The donor doesn't have to specify exactly what each child will receive. The trustees can dispense money as they see fit for the education, maintenance or benefit of the children. Once the children reach the age of 25, they must at least have the right to income from the trust.

Discretionary Trusts - The trustee has absolute discretion over who benefits from the trust from amongst a class of beneficiaries specified by the settlor. However, a gift into such a trust is immediately chargeable to inheritance tax at 20% if the gift takes the settlor over his or her 'nil' rate band. The Inland Revenue can continue to levy charges every 10 years.

Interest in Possession Trusts - Flexible Power of Appointment. The trustees have discretion over who benefits from the trust, within classes of beneficiary selected by the settlor at the outset. But the income generated by anything in the trust is automatically given to specified beneficiaries.

Life Interest Trusts - The specified beneficiary is entitled to receive for life the income generated by the trusts' investments, but the capital will pass (on death) to the next set of beneficiaries - possibly children.

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HOW SECURE IS YOUR PROTECTION? How secure is your protection portfolio? - If you were to die prematurely, what impact would this have on your family? Would they still be able to realise their plans and goals without you being around? And how would you cope financially if you became too ill to work due to an illness or disability? Take some time out and consider the following:

Permanent Health Insurance (PHI) - For most of us, our income funds everything. If it ceases, everything else stops, so how do you ensure its continuation? The answer is PHI, also now known as Income Protection Insurance. This is a form of protection that pays out a regular amount if you are unable to work because of sickness, accident or disability. PHI can replace a percentage of your income, less any state benefits and cover provided by your employer. The payments are paid tax-free and commence after a period that you specify. You can also decide whether, in the event of a claim, you require the benefit payment to remain level or to escalate annually. 1 in 14 of the work force have been off work for six months or longer due to sickness, accidents and disability. (Source: Department of Social Security 2002)

Critical Illness Protection - Critical illness protection is an insurance that pays out on the diagnosis of certain specified critical illnesses. The illnesses covered vary from policy to policy, but they usually include six core conditions: cancer, heart attack/coronary bypass surgery, kidney failure, major organ transplant, multiple sclerosis and stroke. Generally within 14 days of a specified illness being diagnosed (although this does vary depending on the particular provider), you would receive a tax-free lump sum payment. The financial consequences of not having critical illness protection could be significant. Calculate the size of your outstanding mortgage, liabilities and other financial commitments. Would you be in a position to repay them if you were diagnosed as suffering from a critical illness, or do you have a shortfall?

To compliment our Planning Guide we have also produced a UK specific Specification Manual solely aimed at the domestic/residential side of building.  Are you completing your own drawing plans for the Building Regulations as well? Why not obtain our 'Specification Manual' to assist you with obtaining Building Regulations Approval as well.  Alternatively you may have already secured Planning Approval & just need this document.

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Life Assurance Protection - It’s not a particularly pleasant thought planning for your premature death. However, if you have dependents, it’s essential. Life assurance is designed to do one of two things: replace lost income for dependents or provide a capital sum to repay liabilities. So what are some of your options? Term assurance policies guarantee to cover you over a fixed term, specified at the outset. Decreasing term assurance is usually used in connection with a repayment mortgage. Family income cover pays out as a regular income, which is continued through until the end of the term. Whole of life assurance guarantees to pay out a lump sum on your death whenever this occurs. This type of life assurance can also be used as a vehicle to plan for inheritance tax mitigation.

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Schedule of Articles

property investing
property refurbishment
buying overseas property
moving house
home letting
buy to let
home improvements

top 10 celebrity areas
6 up & comming areas
5 signs that an area is up & comming
city types yearn for the country in town
your place in the sun
equity release
planning permissions & extensions
estate agents
rent or buy
buy to let
mortgage overpayment
mortgage endowments
mortgage protection
stamp duty
self build your home
electrical surveys
the cost of moving in
the perfect neighbourhood
council tax
house price league
good neighbours
stamp duty land tax
top 20 towns 2003
cut the cost of moving
interest rates
buying in scotland
dream homes
first time buyers
the worth of uk homes
bad estate agents
keeping up appearances
home improvements

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