It can sometimes seem impossible for first-time buyers to get a foot on the property ladder, especially considering property prices in the UK today.

Here are 5 tips for first-time buyers to help them with their search for a new home: –

1. Save as large a deposit as possible.

In the current credit crunch the days of 100% mortgages seem long gone. To give yourselves a fighting change in the current market you need to aim for a good deposit. A minimum 5% is a starting point, 10% is much better.

What is the reason for this? Any lender wants to see that you are willing to share the burden of risk inherent in buying a property. By putting down a deposit you are opening up the market of mortgages available to you. For example, the choice of mortgages available to a first-time buyer with 10% deposit is far wider than for someone with just a 5% deposit.

2. Check your credit record

When you apply for a mortgage the lender will carry out a “credit check” and also possible calculate a credit score for you. A credit check will be carried out with one of the 3 main Credit Reference Agencies in the UK. The lender is looking to see what your credit history has been like in the past. Are you good at meeting your financial commitments? Are you a safe bet?

We recently wrote an article on checking your credit record – How to Check your Credit Record

3. Are you a good bet?

The other area which a lender will want to consider is your ability to repay and service the mortgage going forwards. To this end they will be concerned with your employment position. How long have you had your job?

Are you self-employed (if so, do you have accounts showing the levels of income and profits you have generated?) Are you currently in the probation period with a new employer? Are you on notice of redundancy?

All these are areas and questions which you should ask yourself. For example, if you’re considering moving to a new employer could you wait until AFTER you have obtained your mortgage – you are more likely to receive a mortgage offer today if you have worked for the same employer for say 2-3 years than if you have recently moved to a new job and are within a probationary period.

Likewise, if you’re considering self-employment, can this not wait until you are settled in your new home, having obtained mortgage funding etc?

These are all lifestyle choices you need to consider carefully before taking action.

4. Are you on the Electoral Roll at your current address?

The lender will be interested in ensuring you are a “real person” – therefore when you check your credit records make sure you are currently registered on the Electoral Roll at your present address.

To register on the Electoral Roll you need to register with your Local Authority – more information here.

5. Do you have a credit history?

One problem many first-time buyers face is that they do not have a credit history – making it difficult for a lender to check whether they have been able to manage their finances in the past. Banks and credit card companies report account activity to the Credit Reference Agencies.

One tip I have heard many times is for young people to take out a credit card and use it on a regular basis – ensuring they pay of the balance each month in full to avoid interest charges – the credit card company will then report that this account has been maintained well on your credit record and this may increase your chances of being offered a mortgage.

Warning – you must remember that your home is at risk if you fail to keep up payments on any mortgage or loan secured on it.

Always seek independent financial and legal advice before committing to a mortgage or any secured debt.

As most non-taxpayers will know, interest on bank and building society accounts is paid net of tax at 20% – savings rate tax.

Unless you complete a Self-Assessment tax return the only way to ensure that you are not paying unnecessary income tax on your bank or building society accounts is to register for payment of interest on their savings accounts without any tax deducted.

How do I register for gross interest with no tax deducted?

You can either ask the cashier at your local bank or building society branch to register you for gross interest – to do this you need to complete form R85.

The Inland Revenue also have a helpsheet on this subject.

Am I eligible for gross interest on my bank account?

Those helpful people over at HMRC (the Inland Revenue) actually have a tax checker on their website here. Use this tool to see if you are eligible for gross interest payment.

I think I may have paid tax on my savings interest in previous years – can I claim it back?

If you were previously a non-taxpayer and you inadvertently paid tax on some interest received then you can complete form R40 – Tax Repayment Form and reclaim this tax from HMRC.

Waiver of contribution is one of those options usually available under a life insurance or critical illness plan which many people may not be aware of.

It may be mentioned by the financial adviser when the sale is being made but often it is not included for one reason or another.

What is Waiver of Contribution?

Quite simply it allows the premiums (or contributions) to be “waived” on a life insurance or critical illness plan in the event of the life assured not being able to work through accident or sickness.

There is usually a “deferred period” before this option kicks in – normally in the order of 3 months. After this period, if you are still off work then the benefit of the waiver starts and you no longer need to make regular payments into the plan.

This benefit continues until one of the following events occurs – return to work, make a claim under the policy or the policy ends.

So why is Waiver of Contribution so important?

Consider the situation – you have not worked for a long period of time due to ill health – it must be serious to keep you off work for such a long period of time.

It is at times like this that you actually need the life insurance or critical illness cover more than ever – it is also at times like this that you may not be able to afford to continue paying premiums, either through an increase in expenditure (medications, treatment, partner losing time from work to look after you etc) or a decrease in income.

Waiver of contribution gives peace of mind that your protection arrangements can remain in place at the time that you most need them to be in place.

Shrewd Action

Always consider the benefits of adding waiver of contribution to any life insurance or critical illness plan you take out.

Have you made a claim under waiver of contribution? If so, please let us know of your experience below.

We are receiving a steady stream of contacts from people asking various questions, and although we cannot specifically provide “advice” in the regulated sense, we are keen to ensure that our articles are relevant to the topics you are interested in reading about.

Please comment below or contact us via our contact page to outline those areas of personal financial planning you are interested in reading about.

We will then take into account requests and suggestions when planning and writing future articles.

Hope you’re finding the site useful!


Credit Referencing – When you Apply for Credit

Many people don’t realise but whenever you apply for credit, whether it is a mortgage, credit card, monthly contract mobile phone etc, part of the application process is that you give permission for the lender to check with a Credit Reference Agency (CRA) into your credit history.

Based on the information stored there, together with the information in your application, they make a decision as to whether to offer you credit or not.

Shrewd Tip – it is shrewd to check your credit records before applying for large loans such as mortgages, car loans etc – to be refused credit as a result of an error on your credit record can be heart-breaking – it could mean losing the purchase of a new home – check well in advance to make sure there are no nasty surprises lurking in your credit record.

What is a Credit Record?

Most adults in the UK will have a credit record – this credit record contains information such as

Address history
Electoral Roll listing
Details of individual agreements – e.g. credit cards, loans, mortgages, current accounts etc.

In respect of each “entry” it will contain information on the name of the lender, the credit limit, the current balance, whether the monthly payments are up to date, whether there have been any arrears on the account etc.

Why should I be interested in this?

As with all things, information stored in these credit records can be incorrect and therefore it is wise from time to time to obtain a copy of your credit records to check that no errors are showing which could be detrimental to any future application for credit.

How do I obtain my Credit Report?

There are 3 main Credit Reference Agencies in the UK and they are required by law to provide you with a copy of your record – a statutory report – on request.

They can currently charge a fee of £2 and access to your report is available under section 7 of the Data Protection Act 1998.

Some of the companies offer additional services such as allowing you to access your records on line – for this they charge additional fees – but if you only wish to check your current report then you need to apply for a copy of your statutory report for which the current fee is just £2.

Below are details of how to request a copy of your credit report from each company:


You can obtain a copy of your credit report by visiting their site here and downloading and returning their application form.


You can obtain a copy of your credit report by visiting their site here. Again, download their application form, complete it and send off with your cheque for £2.

Call Credit

Visit their site here.

Remember – to just obtain a copy of your credit record you need to request the statutory report for which the fee is currently £2. We have not linked to their application forms as the version or location may change – you need to search their sites for the application forms.

What should I do when I receive my report? 


Firstly read through it and the accompanying booklet explaining about your credit record. Then go through it to check that all the entries are correct.

If any of the entries are incorrect then you can either contact the Credit Reference Agency or the originator of the information (e.g. credit card company) and explain what is wrong, why it is wrong and ask them to correct it.

If this fails to correct the situation then it would be shrewd to make a second request for the information to be corrected – and it would also be shrewd to send this request by recorded delivery to prove they have received the request. 

In the event that they fail to correct the mistake then you are entirely within your rights to make a complaint to the  Office of the Information Commissioner.

We would welcome your comments on this article, together with an hints or tips you could pass on to other readers in respect of your own experiences with credit reports, credit report agencies and the Information Commissioner.

Trusts – An Introduction

This article is an introduction to Trusts and how they can be used in financial planning to achieve your money and wealth goals not only as a tax planning tool but also to protect your existing wealth.

What is a Trust?

A Trust is any arrangement whereby one person(s) manages and looks after assets for the benefit of another person or people. It is a legally binding agreement and is covered by various Trust and Taxation laws as well as judicial precedent.

Who is involved?

There are three classes of person involved in the setting up of a Trust – a Settlor is the person who sets up the trust, normally to receive their own assets – the trust assets are looked after by the Trustees for the ultimate benefit of the Beneficiaries.

During the term of the Trust, the Trustees are the legal owners of the Trust assets but the Beneficiaries are the beneficial owners. It is the Trustees legal responsibility to ensure that all decisions made in respect of Trust assets are made in the best interests of the Trust’s Beneficiaries.

It is normally good practice to have more than one Trustee and in the majority of cases the Settlor will also be Trustee. In line with this, it is also possible to name direct individuals to be Beneficiaries under a Trust or this could be written into the Trust to cover a group of people – for example, “all my children who survive me by 28 days”.

How is a Trust set up?

A Trust is generally set up by completion of a Trust deed. This deed sets out the nature of the Trust, the Beneficiaries of the Trust and the powers and obligations of the Trustees.

In respect of life insurance policies generic Trust wording can usually be supplied by the life office to help the Settlors’ legal representative ensure that a correctly worded Trust is put in place.

Are there many Different types of Trust?

Yes – there are a number of different types of trust and they all have different purposes – further information on the different types is available from your Solicitor – the purpose of this article is to introduce you to the topic of Trusts and how they can be used in relation to your own personal financial planning. In future articles we will deal with some of the more common Trust arrangements in more detail

How are they used in financial planning?

Two of the most common uses for Trusts in financial planning are to protect assets from taxation or creditors or to ensure that assets pass to the correct beneficiary in the event of the death of the Settlor.

The majority of people reading this article may come into contact with a Trust arrangement through taking out a life assurance policy.

The Settlor, who is also usually the life assured, sets up the Trust using a standard wording provided by the life office (which it is advisable to get checked by a suitable qualified Solicitor) to leave the benefits from the policy (the sum assured) for the benefit of specific individuals.

A normal course of action would be for a parent to effect a life policy and place it in Trust for their children. There are several benefits to this course of action:

1. The sum assured on death is outside of the deceased’s estate and is therefore not normally subject to Inheritance tax.
2. The proceeds from the plan can normally be paid out quicker as there is no need to wait for probate to be obtained to allow release of funds. Usually provision of the death certificate and a copy of the Trust is all that is required.
3. It stops third parties accessing the funds which may not be what the life assured intended – it’s amazing who can “come out of the woodwork” when someone dies and there is money to be shared out!
4. It stops the sum assured being used to repay debts of the life assured in the event of the life assured dying whilst being insolvent or having large debts.
5. If the Beneficiaries are young children then the money can be held within the Trust and the Trustees would usually have the ability to make advances of the funds for the welfare and benefit of the children, whilst retaining the monies until the children are older and better able to manage their own affairs.
6. Grandparents could utilise a Trust to allow their assets to effectively “skip a generation” and be passed to grandchildren which is a particularly popular arrangement where their children are already wealthy in their own right.

What about Tax Planning?

Yes, Trusts can also be used for tax planning and in later articles we will discuss the various Trust planning tools available in the UK today. Gifts can be made into specific Trusts which provide an immediate saving against Inheritance tax; other Trusts exist to remove growth of investments outside of an Estate whilst still allowing the Settlor access to their capital.

Please add any comments below.

In this article we will compare income protection insurance to critical illness cover and consider how they can be used together to protect your financial position.

Critical Illness Cover or Income Protection?

Many people ask whether it is more appropriate when considering insuring against ill health to take out income protection insurance or critical illness cover.

We think the confusion arises as many people seem to believe that the two types of insurance do the same job and fulfill the same need. Before considering this in more detail lets just recap on what each type of insurance is and how it works.

Income Protection Insurance

Income Protection Insurance, previously known as Permanent Health Insurance (PHI), is designed to provide the person covered with a replacement income in the event that they are unable to work through accident or ill health. It is not to be confused with ASU (Accident, Sickness and Unemployment) which generally pays out a benefit for a maximum term of 12 months.

After a deferred period (period between telling the life company about the illness and the cover commencing payout) the regular tax-free income is paid to the life assured until the earlier of return to work, death or retirement.

The income can be level or indexed, i.e. it increases each year, either in line with RPI or a fixed percentage, to maintain the real value of the policy.

Critical Illness Cover

Critical Illness Cover (CIC) pays out the sum assured when the life assured is diagnosed as suffering from one of a range of critical illnesses.

Cover is normally provided for a “core” range of illnesses as set out by the Association of British Insurers Statement of Best Practice – covering such illnesses as cancer, stroke, heart attack, kidney failure, major organ transplant, multiple sclerosis and coronary artery bypass surgery.

In addition to this, the majority of policies also cover “additional” conditions such as blindness, coma, loss of limbs, loss of speech, Parkinson’s disease, benign brain tumour, paralysis, terminal illness, third degree burns to name but a few.

The policy can be taken out for a fixed term or whole of life on a single or joint life basis

Income Protection and Critical Illness Cover – complementary policies

To put this into context we need to consider the following basic points of each type of cover: –

1. Income protection = regular income if unable to work through accident or sickness
2. Critical Illness Cover = lump sum payment on diagnosis of one of a number of critical illness conditions.

It is therefore possible to see that depending on the nature and severity of the illness it might be possible for the policyholder to claim one or both policies.

Off work sick – but not critically ill

An illness may be severe enough to prevent you from working (thereby making a claim under the income protection plan) but not one of the listed conditions for claim under the critical illness plan.

Critically Ill but able to return to work after treatment

An illness may be critical e.g. cancer, but not such that in the event of successful treatment of the condition it is feasible that the life assured could return to work after a period of time maybe a year or so – but not long enough to really benefit from making a claim under an income protection plan.

The income protection plan may also provide proportionate benefit in that if the life assured returns to work on a lower salary as a direct result of having suffered their illness they may be entitled to continue receiving some of the benefits payable under the income protection plan


In conclusion, we would consider critical illness cover and income protection insurance to be complimentary in their nature and therefore it would be wise to consider taking out both types of insurance.

Naturally you should consult an Independent Financial Adviser before purchasing either of these types of insurance as they will be able to research the marketplace for you and make suitable recommendations based on your own particular circumstances.

We would welcome any comments you wish to make below.

Personal Pension Plans

One popular method of saving for retirement is to use a “personal pension plan”. This is a tax-efficient savings vehicle for building a fund from which to take a lump-sum and/or income in retirement.

It offers a number of tax benefits which will be covered later in this article.

What is a Personal Pension?

A personal pension is a regulated investment plan into which regular and single premium pension contributions can be made. Money paid into a personal pension plan by an individual qualifies for tax-relief at source – basic rate relief is given – for example, invest £80 per month and £100 per month is actually credited to your pension plan.

The pension company effectively reclaims basic rate income tax from HMRC on your behalf.

Higher rate taxpayers may be able to gain an additional 20% tax-relief on their contributions by completing an annual tax return.

Money invested in a pension plan is typically invested in a fund or funds – these are usually pooled investment/pension funds where the fund manager takes the money of all those invested in the fund and buys a wide range of stocks, shares, property etc depending on the nature and aims of the pension fund.

These investments could be shares, government stocks, corporate bonds, fixed interest investments, commercial property etc. both here in the UK and overseas. The choice of where and into which funds to invest is down to the policyholder.

Alternatively they may choose to invest in a managed fund – which may be a “fund of funds” – in this scenario a fund manager will invest in a range of other pension funds in line with that funds investment goals and a stated attitude to investment risk.

How much can I invest?

It is possible to invest up to 100% of your salary/earned income in to a personal pension plan, although there is an annual maximum contribution allowance of £235,000 and a lifetime allowance of £1,650,000 – the implications of exceeding these allowances will be covered in later articles.

How do they work?

Your money is invested, either on a single or regular basis, into a fund(s) which you hope will grow between now and retirement. At retirement you have options in terms of taking benefits

Taking Benefits

Under normal personal pension rules it is possible to take up to 25% of your accumulated fund at retirement as a tax-free lump sum – this is known as a “pension commencement lump sum”

The remaining fund is then applied to provide you with an income in retirement and there are two main options open to you in respect of taking this retirement income from your pension plan.

Most people will be familiar with a “pension annuity” – this is an income for life. Basically you exchange your remaining pension fund, after tax-free cash, for an income for life from a pension company.

This income is taxable in retirement, but remember that even retired people continue receive a personal allowance against income tax.

You don’t have to take your pension annuity with the company with which you built up your pension pot – under the “open market option” you are allowed to shop around for the best pension deal – more information on annuity purchase will be given in a separate article at a later date.

Warning – before transfering your personal pension plan to another providers for a “better” annuity rate you should enquire as to whether your current plan contains guaranteed annuity rates – these are sometimes in excess of those available on the open market and over the years we have seen some in excess of 9% per annum depending on the basis on which you take your pension – always seek independent financial advice before taking or transferring benefits to another pension provider.

The second option is known as “unsecured pension” (previously known as “income drawdown” – this is riskier than annuity purchase as your pension fund remains invested and you effectively draw an income from your pension fund.

The government sets limits on the amount of income you can drawdown under this type of arrangement and typically the level of income available is greater than that available under an annuity.

There is a risk though – recent stock market drops have seen many “income drawdown” holders see large reductions in the size of their pension funds, a fall in value which has been escalated by them taking a fixed level of income from the pot – this fixed income becomes an increasingly burden on a falling pension fund.

You should seek specialist advice if you are considering using the “income drawdown” option due to the nature of the risks involved as this type of pension benefit might not be suitable for you.

When can I take pension benefits?

Benefits under a personal pension used to be available between the ages of 50 and 75 – this is changing however and the earliest retirement age is moving to 55 from 6th April 2010.

Tax benefits of a personal pension

As mentioned already, you receive tax-relief on premiums paid into a personal pension plan. Indeed even with out income, a person can contribute up to £3,600 gross per annum into a personal pension and still receive tax relief on premiums invested – in this scenario you would actually invest just £2,880 and the pension provider would reclaim the difference from the HMRC (tax man) on your behalf.

The pension fund grows in a tax-efficient manner with all gains under a personal pension plan being free of capital gains tax.

Choice of investment

Most providers offer a wide range of funds into which you can invest your money. You should consider taking independent financial advice to help in choosing a pension provider and investment portfolio – the adviser will discuss your aims and goals with you, as well as your attitude to investment risk as this will help determine the choice of funds most suited to your requirements.

SIPP – Self-Invested Personal Pension

A SIPP is simply a special type of personal pension plan – it operates in just the same way as a personal pension plan in terms of tax-efficiency, contribution limts, access to benefits etc, it’s main difference being that it has a much broader range of options in terms of where you can invest your pension money: –

Stocks and Shares
Futures and Options
Commercial Property
Unit Trusts and OEICS
Traded Endowment Policies

The range of investments under a SIPP is therefore considerably wider than under a personal pension plan. With some specialist SIPP’s however the charges incurred can be higher.

Pension Transfers

You do not have to keep your personal pension plan with one provider, and indeed you can have more than one personal pension plan at any one time.

From time to time you may consider moving to another provider – for example, the new provider might have a wider fund choice, more competitive charges, better customer service.

Before transfering to another provider it is important to take Independent Financial Advice to ensure that you are not giving up any valuable guarantees under the existing pension plan, such as a guaranteed annuity rate with your current provider.


This article has given an insight into the workings of a personal pension plan and in subsequent articles we will consider some of these areas in greater depth.

Many people have heard of income protection – yet many remain unsure exactly what it is and how it can be used to protect their family and themselves.

What is Income Protection?

As the name suggests, Income Protection Insurance, previously known as Permanent Health Insurance (PHI), is a type of insurance which is designed to replace lost income in the event of long term illness or accident.

Unlike Mortgage Protection Insurance and ASU cover, which usually pay an income limited to 12 months, Income Protection Insurance is designed to pay replacement income right up until retirement in the event of the claimant being unable to return to work.

How much Cover can I get?

Life companies will normally cover you for between 50% and 60% of your pre-disability income. In the event of a claim they will normally deduct any continuing income or state single person long term disability benefit.

A claim once in payment under an Income Protection plan is normally paid free of UK income tax.

Under what Circumstances will a Claim be paid?

This is dependent on the basis on which the plan was originally set up: –

Own occupation – pays out if unable to perform your own occupation as disclosed on the application form

Any occupation – pays out if you’re unable to work at any occupation, normally based on work in line with your education and training

Activities of Daily Living – this type of plan pays out if you are unable to perform a number of task – such as eating, dressing, using the toilet etc – you need to be unable to perform a number of tasks from a range of tasks stated by the insurance company – e.g. any 2 from a range of 6 tasks.

Own Occupation cover generally carries the highest premium rates – and may not be available for riskier occupations e.g. working at heights, with explosives, dangerous occupations etc.

How Soon Can I Claim?

You normally submit your claim as soon as you stop working. The payout on the plan will not start until the end of the “deferred period” – you choose this at application – e.g. one month, three months, six months, twelve months.

Warning – the deferred period can in some instances commence from the date of notification to the life office, NOT the first day of sickness – make sure you don’t wait too long to tell them of a claim.

Naturally the longer the deferred period, the lower the premium, since you are less likely to make a claim on the policy.

What About Inflation?

You can set up your plan to allow for annual rises in the cost of living and most people opt for this benefit – your level of cover generally rises each year with a corresponding rise in the monthly premium to offset the general increase in the cost of living over time.

What About if I am Well Enough to Return to Work?

Normally your claim stops but you carry on paying premiums and your policy continues – the insurance doesn’t end.

There are various options under these plans which may be available: –

Proportionate benefit – if you returned to work in a lower-paid position as a result of your illness then a proportion of the benefit may continue to be paid

Rehabilitation benefit – if you returned to work after a period of illness and your income falls, then this benefit may pay a proportion of your cover to cover the loss of income and this benefit normally pays for up to 12 months.

Linked Claims – if you return to work following illness, and subsequently have to stop working due to the same condition then this benefit means you don’t have to go through the same deferred period again and the claim payout can recommence without delay.

Choosing a Policy

We believe that income protection insurance is vitally important for all individuals – especially those who do not have any cover through their employment and, in particular, the self-employed.

Most people are dependent on their incomes – simply ask yourself this question – “how long can we survive with no income?”

Naturally every policy is different so it is therefore important to take advice from an Independent Financial Adviser.

In our next article we will consider this type of cover in more detail and the practical uses to which is can be put

Please share with us your experiences and thoughts on income protection insurance below.

Many people today are not only insuring themselves against death but also against critical illness.

What is Critical Illness Cover?

As the name suggests, critical illness cover pays out a tax-free lump sum in the event of diagnosis of a critical illness. In order to claim, the life assured needs to be diagnosed with a critical illness listed amongst those covered by the life insurance company.

Which Illnesses are Covered?

Most providers today provide cover for a comprehensive range of critical illnesses. The Association of British Insurers has published standard definitions for critical illness policies to which most life insurance companies adhere.

There is a “core” range of conditions covered which are:

Coronary Artery By-Pass Surgery
Heart Attack
Kidney Failure
Major Organ Transplant
Multiple Sclerosis

In addition to this group of “core” conditions there also exists a range of “additional” conditions.

Aorta graft surgery
Benign brain tumour
Heart valve replacement or repair
Loss of limbs
Loss of speech
Motor neurone disease
Parkinson’s disease
Terminal illness
Third degree burns

Not all life insurance companies will provide cover for all illnesses; they may indeed provide cover for illnesses which are not listed.

The important thing to bear in mind is that a claim is payable based on diagnosis and acceptance by the life insurance company. Should you subsequently be cured of the condition you have claimed for then there is no need to repay the sum assured which has been paid out.

Why should I take out Critical Illness Cover?

With advances in medical science it is now more likely than ever that you may be successfully treated for a number of critical illnesses which only a few decades ago would have been fatal. The question you need to ask yourself is, how would you cope financially if you were to “die just a little”. Here are some of the uses to which a payment from a critical illness policy could be put:-

Repayment of loans and mortgages
Replace lost income (especially if self-employed)
Treatment and convalescence
Cover salary of spouse/partner who takes leave from work to care for you
Pay for amendments to home e.g. downstairs bathroom, wheelchair access

The list is endless and needs to be considered in respect of your own personal and family situation.

What types of Policy are Available?

Critical Illness cover can be taken out on a term or whole of life basis, providing cover for single or joint lives assured. It can be taken out alongside life insurance, or as a stand-alone policy in its own rights.

Another option available is a “family income policy” by which the policy pays an annual income in the event of a claim – e.g. A 20 year plan for £30,000 per annum – successful claim in year 7 – the plan pays £30,000 per year to the claimant until the end of the 20th year.

Claims Experience

As more and more people take out critical illness cover, the level of claims has risen. For example, Legal and General recently published its claim figures for 2008 which showed that they paid out total claims of £146 million, with 93% of claims being accepted and their average claim being £70,000. More information on this can be found here.

Getting the Best Deal

When buying critical illness cover it is important to remember not to buy it based on lowest premium – you need to compare the different types of cover available, the conditions covered (together with definitions) and the claims experience of the various life insurance companies. We strongly recommend that you take Independent Financial Advice in this area before making a purchase.

Our next article on critical illness cover will consider further the benefits of such plans and the different purposes to which critical illness cover can be put.

We would welcome your comments on critical illness cover – do you own any? have you claimed on a policy?