Life Cover & Little Things

One of the UK life insurance companies, called 'Bright Grey' (http://www.brightgrey.com/ or 0845 6094 500)recently put out a nifty little booklet that they send people when their life insurance plan goes live.
I thought a few pages were worth sharing here.

The first is the point they make about the fact that it is the 'little things' we spend our money on that can soon add up. A few coffees here, a pizza or takeaway curry there. Bright Grey go on to demonstrate a little life cover could well cost a lot less than the 'little things' we spend money on without noticing.

But it is the next page that caught my eye. Surely the 'little things' are the real reason we need life insurance. I mean, of course, not the coffee and curry little things but the 'little things' we hold in our arms. Our children.

If you have children or other dependents that could be financially impacted if you were no longer around please consider life insurance. As Bright Grey point out it can be more complex to purchase (and purchase properly) than other insurances so please consider taking professional financial advice before applying.

Contact us if you'd like help working out the type and amount of cover you need or applying for life insurance.
The Green financial guide to insurance protection can be downloaded here:
http://www.iangreen.com/downloads/protection.pdf and life insurance information starts on page 4.

You can also look at the photo albums on www.facebook.com/GreenFinancial if you prefer

Statement of Professional Standing (2011-12)

People must be approved by the FSA before giving financial advice. You can check I am approved by the FSA to give advice by going to www.fsa.gov.uk/register and searching with my FSA individual reference number shown above.


The Green Financial Advice Limited FSA firm number is 523308 if you'd like to check that. 

"The Chartered Insurance Institute (CII) has issued this statement to the above named adviser. The CII has checked that the adviser meets the required qualification standard and confirms the adviser has signed an annual declaration stating that they have kept their knowledge up to date and complied with the Statements of Principle and Code of Practice for Approved Persons (APER)."


Dr Alexander Scott,
CEO, Chartered Insurance Institute

Over half of Brits would struggle financially within 3 months if illness struck

Over half of Brits would struggle financially within three months if illness struck


• 52% of UK workers could survive financially for only three months on statutory sick pay

• 23% would neglect their health; 12% would cut back on cigarettes or alcohol

• 14% say they’d have to move house if they were unable to work.

New research from Aviva – see http://www.aviva.com/media/news/14395/ for the full press release- reveals that over half of UK workers (52%) would be unable to survive financially for more than three months if they were off work with an illness. Around a third (30%) say they’d survive for less than a month. Less than one in ten (9%) say they’d remain solvent for a year or more.

Aviva’s research, conducted to highlight both employer and employee concerns about absence issues, uncovers a worrying protection gap. It also reveals that many people aren’t aware of the level of support they’d receive if they were unable to work due to illness – meaning that in reality, their finances may not stretch as far as they think.

While it’s reassuring to see that two in ten (19%) employees know how much Statutory Sick Pay they’d be entitled to, a quarter (26%) think they’d receive considerably more: 16% of respondents believe that they would be entitled to over twice as much benefit.

Worryingly, Aviva’s research reveals that if finances were tight, some people would neglect their health in favour of non-essentials. Nearly a quarter (23%) would put their health at risk - with 14% saying they’d miss important health checks and one in ten (9%) admitting they’d put up with health ailments. One in ten (12%) say they’d cut down on cigarettes or alcohol.

Nearly half (49%) say they’d eat cheaper supermarket offers and fast foods, while one in five would cut down on family holidays. A similar proportion (19%) say they’d use less heating/electricity.

Unsurprisingly nearly seven in ten (65%) workers cite financial concerns as the main reason to get back to work quickly if they are off sick. Regaining a sense of purpose (28%), getting well (21%) and providing for their families (16%) are also high priorities.

While the motivation to return to work is apparent, the research reveals that many workers are afraid of returning to the workplace after a long-term illness. A significant number of people (44%) fear that going back to work could cause a relapse of their condition and a quarter (24%) worry that they won’t be able to work to full capacity.

Steve Bridger, head of group risk, Aviva, UK Health says: “It’s understandable that over eighty per cent of people think long-term sickness is something that happens to other people. However in reality you never know what’s around the corner and few people have the savings available to support themselves and their families for very long. Employment and Support Allowance can come to as little as £67.50 a week – even less than Statutory Sick Pay - which in many cases would hardly cover a family’s food shopping, let alone their mortgage and other necessary expenses."

Ian Green: Income protection insurance – which I prefer to call ‘expenditure protection insurance’ can help address many of the issues identified above, and provide peace of mind to individuals who have enough to deal with when they are on the receiving end of unwelcome health news.

Why not have a look at my guide to protection, either at:
http://www.iangreen.com/downloads/protection.pdf

or in the photo albums at
www.facebook.com/GreenFinancial


Aviva finished by stating : Four fifths (80%) of respondents thought it was unlikely that they would actually have to deal with long term sickness, which perhaps accounts for their lack of preparation. Government figures show that over 2.1 million 18-64 year olds were claiming state benefit for incapacity in November 2009.

Keyperson & Shareholder Difference

Notes on Company Wealth Protection Insurance Plans


Key Person

Key person assurance is used to address the fact that although many businesses fully insure their material assets, often the ‘human assets’ are overlooked. ACME LTD are fully aware of this, and require the three key individuals of the company to be insured for the specified amounts. Should the unfortunate happen the proceeds could be used for many things, among them replacement costs, such as headhunting fees, salary for a replacement person, business interruption costs as projects may be delayed or existing contracts/contacts lost, or other financial implications such as falling profits, or cancelled loan agreements (if appropriate). We recommend you review the level of cover provided regularly as the business continues to grow.

All costs will be borne by ACME LTD and the plans are written for a 5-year term. This should also ensure that should you wish them to, HMRC will allow the premiums as an allowable deduction for Corporation Tax purposes, however we also recommend you carefully consider the potential taxation of key person policies. I can confirm that once the plans are in force you should send a letter to send to your local HM Inspector of Taxes to obtain clarification. I can provide a specimen letter if required.

In summary, Key person policies are paid by the company, for the benefit of the company.


Shareholder

The death or critical illness of a shareholder can often halt a business in its tracks because of the need to rearrange the shareholding. Problems may arise if the family of a deceased shareholder do not agree with the way the others are running the business or if a shareholder who is critically ill is no longer able to contribute to the business but still wishes to have a say and reap financial rewards thus holding the company back. In order to mitigate these problems (and others) and to enable swift action to be taken I recommend that the shareholders protect their interests in the business. We discussed the implications of individual shareholders dying or being diagnosed with a critical illness.

If any of you were to die or be unable to work through critical illness the situation would be difficult. It was agreed that the other partners should have the funds available to purchase the shareholding. This way the shares would stay in the same hands and the other party would have funds to deal with the situation as they wish. So for example, if Person A were to die, funds would be available for Person B and Person C to purchase the shares, keeping the shares in the control of those still running the company and providing Person A’s family with money to use as they wish.

The shareholder cover was based on the value of ACME LTD at XX date. I recommend that you review this amount of cover as the business grows to ensure that the cover reflects the market value of the business. Although ACME LTD will pay the premiums they will be treated as a ‘P11d’ style benefit and taxed accordingly. You should ensure that your accountant is aware of this and deals with the premiums appropriately. As you may have differing premiums you may wish to ‘equalise’ the costs, thus ensuring equal taxable benefit for each of you.

In summary, Shareholder protection provides benefits for individuals or their families, in exchange for the value of shares

Please note this is just intended to be a very basic guide.
There is more information in my downloadable guide http://www.iangreen.com/downloads/Bus_si.pdf
but please do seek professional advice before arranging these types of contracts

16 years as a Financial Adviser

Hallowe'en 2011 was the 16th anniversary of my being a licensed financial adviser.

To celebrate, I sent a small 'trick or treat' token of my appreciation to my clients.

Here is how it happened...

Hundreds of packets of sweets were placed into small gift boxes or readied for insertion into envelopes



Placing the mini chocolate pumpkins, without squashing them (squash - geddit!?) with the happy halloween label facing up' into the gift boxes took the longest...



I pride myself on a personalised service so I wrote the salutation and personally signed all the client letters before folding into the protective envelopes.

Office floor space was at a premium as the mailing progressed...!

For some strange reason the blog software wants me to rotate...?
Rest assured, I didn't have to carry the bags matrix style running along the wall, although there were a few bags and a few trips.

Green by Name...

When the last post bags had left, it was recycling time. All the packaging was recycled. As to the mailing, the vast majority of the envelopes were made from recycled or sustainably sourced stock, the plastic boxes were UK made and designed as a client gift to be reused.

THANK YOU

The aim of the event was to say a big THANK YOU to clients, a number of whom have been clients since my first year, sixteen years ago. As a small business I never take anyone's patronage for granted and I truly appreciate the trust clients place in me to assist in their financial planning and when recommending my services to a friend, family member or colleague.

Beware Greeks Rejecting Gifts

Time for another update on market movements and happenings.


Those clients that I have met face to face with recently will be aware that my general thoughts on imminent future market movements are that we are unlikely to see major upwards gains in the markets in general in the near and medium future but that during that time I expect high volatility – ie lots of ups and downs.

This is good for those saving regularly as it enables the effect of ‘pound cost averaging’ to take effect - see http://greenfinancial.blogspot.com/2011/02/pound-cost-averaging.html

However for those already invested it probably represents more of a roller coaster ride.

Do remember, that the lower risk (or volatility) portfolio content you have, the lower the exposure you have to equities and the markets, so the lesser effect any drops (or rises) have on your investments.

For those in the lower numbered portfolios it is actually more like just a bumpy road than a roller coaster!

As ever, if you have any concerns, please do contact me.

Onto the commentary…

Just when the situation in the Eurozone appeared to be moving in the right direction with the agreement last week (has anyone else noticed every time I leave the country markets seem to rise…? Perhaps I should operate from abroad?) on a further bailout package and a voluntary 50% haircut on Greek sovereign debt, we had the unexpected announcement this week that the Greek government has decided to hold a referendum on the latest euro-zone package, probably in December or January.

In reality, the Greek government is simply trying to foster public support as it provides the Greek population with the decision between continuing austerity and membership of the single currency. Some might call it a gamble.

Data from opinion polls suggest that although 60% are opposed to the new Eurozone package (and continuing austerity), approximately 70% want to remain in the Euro. And let’s be clear about it… if Greece want to remain in the single currency then it will have to take the medicine prescribed by the Eurozone governments (primarily Germany and France). The alternative is for Greece to leave the Euro but this route is not (publically at least) on the table for Greece or the other sixteen members of the Eurozone.

I felt that the global market reaction to last Thursday’s announcement was overdone (again) as we had only seen headlines from the Eurozone governments with little detail on how these packages and targets would be achieved. Certainty is a crucial factor for global investment markets and the re-emergence of uncertainty has led to the significant falls in global equity markets yesterday and today (writing at 9:30 am Weds).

As I have said in the past, in my role as Advisor / Manager of your portfolio(s), part of my job is to read, research, analyse and assimilate as much information as possible to inform and then blend the asset allocation models and investment strategy. It is far from a rosy picture for the global economy at present but, as I have stated in the past, ‘investors’ or ‘the markets’ do have a tendency to overreact to “news”, either on the upside or downside, and I believe that this is the case today. Investor sentiment, rather than economic data is the key driver of global investment markets in the very short term.

Although it is far from easy, I continue to believe that patience is important, ultimately economic fundamentals will win out and the vast majority of clients should remain invested in line with the diversified Model Portfolios.

As I say at the outset of this post, I expect an extended period of volatility in global investment markets – and this will no doubt be magnified in the run up to the proposed Greek referendum, and I will continue my regular dialogue to ensure that client portfolios are positioned to meet the dual mandate of creating and preserving wealth based upon our your attitude to risk and volatility.