YOUR PARENTS:
Some of our clients are concerned about their elderly parents and whether they will have sufficient funds to pay for comfortable, long-term care, or whether they may need to use some of their own savings to help them out. Unfortunately, once care is needed, there is little they can do, other than insist on an NHS Continuous Care Assessment and try to manage the parents’ money as effectively as possible.
YOUR CHILDREN:
Most of our recently retired clients are enjoying their new found freedom by travelling the world and taking up new hobbies and interests. They are also celebrating the successes of their children and welcoming grandchildren into their lives. It is a lovely stage of life and we send them our very best wishes.
A large part of our work is to identify any risks that might affect this harmonious existence and then find ways of mitigating them. As stated above, if elderly parents need financial help there is little to be done, but what would happen if an adult child and/or their family suddenly needed help? Who could become financially dependent on YOU if they or their partner died or became seriously ill?
Providing financial protection for adult children is not something that springs to mind for most people – but perhaps it should do for those people who want to maintain their own financial security and independence.
The main needs for protection involve children, grandchildren and other possible dependants. A son or daughter would almost certainly call on the bank of mum and dad if they suffered some kind of financial catastrophe.
The following real client story illustrates the problem (the names have been changed):
Our clients Peter and June have recently retired in their late 60s – they can afford a comfortable lifestyle but cannot spend without limits. They were very happy until their son-in-law Fred fell seriously ill with stomach cancer and had to give up work. His salary stopped after six months and they found that the state support for mortgage interest benefit is inadequate, being only a loan that will eventually have to be repaid. The grandchildren Katie and Alice attended a private prep school and until James’ diagnosis, daughter Sophie didn’t need to work and could spend a lot of time with her children. Without significant financial input from Peter and June, it is tough for the family to cover most day-to-day expenses – the girls’ education has been disrupted and life has become very stressful for everyone. Peter and June have had to encash some of their retirement fund to keep the family going and of course they will want to provide more help if Fred dies, leaving their daughter to struggle with the children on her own. Indeed, they will find it hard to refuse. Things would have been a lot better if Peter and June had advised their daughter and son-in-law to have income protection and life assurance cover. They could have offered to pay some or all of the premiums to make sure it stayed in force. After all, their security is on the line too.
Any parent with grown-up children should ask themselves what the financial consequences might be for them personally if their offspring – or the people on whom their children or grandchildren are financially dependent – were to fall seriously ill or die.
Setting up life cover and income protection plans for adult children need not be expensive and is worth every penny if it avoids a financial catastrophe affecting all generations of the family. It can also be a very effective inheritance tax planning mechanism.
If this issue has resonated with you, please do get in touch for a chat – everyone deserves to be secure and happy.