Why protect your lifestyle?
As a busy teacher, you’ve worked hard to build the life you have. Teaching is a vocation, but it’s also your livelihood. It pays the bills. So, if you couldn’t work, it wouldn’t just be your students who would suffer.
In this guide, we’ll take a closer look at financial protection products and how they can help you to protect your lifestyle and your family.
How to protect your income as a teacher
Most professionals will have some sick pay built into their work contract. As a teacher, you’ll usually be entitled to six months full pay and six months half pay if you’re off sick.
While this may seem like a lot, if you become seriously ill you may need more time for treatment plus a period of recovery before you’re able to go back to the classroom.
If this were the case, how would you pay your mortgage, bills or car payments when your sick pay runs out?
Savings will only stretch so far, so it may be worth considering income protection which is designed to help cover your essential bills until you’re well enough to go back to work.
Financial protection against critical illness
Critical illness cover is slightly different to income protection. It pays you a one-off single lump sum if you’re diagnosed with a pre-defined serious health condition. These conditions will be outlined in your policy document but will often cover cancer, heart attacks, strokes and dementia.
The lump sum could be used to pay for private medical treatment in the UK or abroad, or for residential care should you need it. But remember to check the fine print as cover for any pre-existing condition will usually be excluded.
You won’t always receive a pay out at the time of diagnosis and could be unwell for some time prior to receiving an outcome from your doctor. That’s why it’s worth pairing this cover with income protection to ensure you can still pay your regular bills while you’re waiting for treatment.
Protecting your home
For many, a key priority will be making sure their family is able to keep their home, if they were to pass away before the mortgage is fully repaid.
Mortgage protection is designed to repay the outstanding mortgage, so your loved ones aren’t left with that financial pressure.
Most mortgage protection policies offer decreasing cover. So, as the value of your mortgage decreases over time, so does the payout amount for your insurance. That’s why mortgage protection is generally best suited to those with a repayment mortgage.
It’s important to ensure that you’re taking out the right policy for your needs. For example, if you have an interest-only mortgage or other lifestyle costs to consider, a broader life insurance policy may be better for you.
Protecting your family’s future
If you’re looking to provide wider cover and security for your family when you pass away, life insurance (or life assurance) may be right for you. Especially if you’d like the peace of mind of knowing how big your payout would be.
Life insurance pays out a tax-free lump sum to your family when you pass away. There are no restrictions on what this money can be used for, so your family can use the money for what they need.
While you may receive some financial payout from your Teachers’ Pension Scheme if you are still working, it may not be enough to cover everything you would hope. Life insurance provides an extra safety net to ensure your loved ones have everything they need.
Like any protection product, the extent and duration of your coverage will depend on your specific needs. Before you tailor your policy, you must select from three primary types:
Term life insurance
As the name suggests, term life insurance lasts for a set term - usually 10, 20 or 30 years. You’ll only be covered for the length of your term, and you won’t accumulate any cash value. The main benefits of this type of policy are the flexible terms and lower premiums. On the downside, you’ll be unprotected when your term ends.
Whole life insurance
You’ll likely pay more for whole life insurance, but in return you’ll get lifelong cover and a guaranteed death benefit. It also features a cash value component that grows over time and can be borrowed against. It’s a more secure type of life insurance, as terms and payouts are typically guaranteed.
Universal life insurance
The main selling point of universal life insurance is its flexibility. You’ll be able to adjust your premium amount and your death benefits and tap into your cash value. However, it’s more complex than standard whole life insurance, so it’s usually best to get financial advice if you’re considering it.
If you’re interested in finding out more about protection policies, it may be worth speaking to a Specialist Financial Adviser from Wesleyan Financial Services. They can help you to find the right cover for you to ensure you and your family are protected. Charges may apply.