If you’ve ever turned down a recommendation of critical illness because you can’t see the value of it, this real-life case study might make you think again.
Peter Simpson is a successful commercial manager for a Berkshire-based firm. He’s married with three children aged 13, 11 and 9 and has a £297,000 mortgage. His wife gave up work to bring up the kids, making Peter the main breadwinner.
When he was 24, buying his first house, Peter had arranged to see an Openwork adviser who helped him sort out a mortgage and critical illness cover. Over the years, Peter’s circumstances changed; he got married, started a family and moved up the housing ladder. During that time he has stayed close to his adviser and updated his cover in line with his changing circumstances.
The value of critical illness cover
Peter has always been able to see the value of critical illness cover, particularly because his father had sadly died of cancer. Aside from covering his mortgage, Peter also wanted to make sure his wife and children would be OK financially if anything happened to him.
In December 2016, totally out of the blue, Peter had a stroke. He had stopped at a friend’s house on the way to work when he suddenly and unexpectedly experienced a terrible buzzing sensation at the back of his head. He lost the feeling in his right-hand side and his speech became slurred. Spotting something was obviously very wrong, his friend got him into the house and immediately called an ambulance. Within 45 minutes Peter was being treated in hospital with his wife by his side.
When he was back home recuperating, Peter started the claims process, which turned out to be extremely straightforward. After a few phone calls and emails Peter received confirmation that his policies would pay out in full and he could expect £380,000 in his bank account.
Avoiding the financial impact of serious illness
Thanks to careful financial planning and an appreciation of the difference a critical illness plan can have on the financial impact of a serious illness,
Peter and his family now have the freedom to make choices. They have been able to make two platform investments, one that would act as a pension for Peter’s wife, and the other to enable Peter, a higher-rate tax payer, to maximise his personal allowance every tax year. They have also reduced their mortgage and swapped it from interest only to repayment.
This case study highlights the importance of protection especially if you have a loan or you’re the main breadwinner. Please talk to us if you think you need cover, or you need to update your existing provision.