Jan 20, 2012

Financial advice for your children

When you have children your priorities change. You no longer have only yourself to worry about. Specialist financial advice will help you plan for both your future and your children’s.

A financial adviser should be able to offer you information and financial products that are relevant to all areas of life. Some of the ones that are most relevant to your status as a parent will be life insurance, but also pensions and other investments to build up a sum of money for the future.


Insurance and the financial adviser
Many people do not consider the importance of life insurance until they have children - and, unfortunately, some do not purchase it even then, sometimes with terrible consequences. The point of life insurance is to provide a lump sum in the event of your death. The policy will typically be for a set amount of time (perhaps 25 years) and is usually long enough to ensure that your children will be independent by the end of it. The payout should be enough money to provide for them until that time. The amount you opt for will depend on various factors, including your current income. A financial adviser will be able to give you information about the best insurer, but also the right policy details and amount of cover for your circumstances.

Life insurance may not be the only kind of cover you should think about, and you should also get financial advice about critical illness insurance and health insurance. These protect you if you become seriously ill or want private medical care, should it ever be necessary. The effect of these covers can be to protect your income by ensuring that you can still work as much as possible, and providing a lump sum if you are unable to work. This is particularly important if you are self-employed, since your business could be your only source of income and its survival dependent on your health.

Investing for the future
A financial adviser will be able to help you think about different options for investing money for the future - whether your own or your children’s.

Financial advice in these circumstances is necessary because there will be financial products that you cannot access without a financial adviser. They will be able to advise you on the right pension for your current and future needs, and organise the application process, for example.

If you want to put aside money for a specific purpose – such as university fees or a deposit for your children’s first house – a financial adviser will be able to help you go about this effectively and tax-efficiently. The timescale of your investment is critical; the profile of your investment portfolio for university fees in 10 years time might be very different to the profile of your pension, which might not mature for another 30 years. A financial adviser will also be able to recommend certain funds of which you might have been unaware; after all, they are the experts and it is their business to know about the many different options available on the market.

Inheritance planning
Finally, a financial adviser will be able to guide you through the maze of regulations and options that surround inheritance planning. Inheritance tax currently runs at 40 percent above the allowance threshold (£325,000). If your estate is more than this, you could lose the opportunity to pass on a significant sum of money to your heirs. Proper financial advice can avoid this in many cases, since there are exemptions available and ways to reduce the size of your estate without incurring this tax.

Conclusion
A financial adviser will be able to help you plan for your future and your children’s by offering comprehensive advice around every area of life, from insurance and investment to inheritance planning. Your first session with a financial adviser will generally be free to allow you to discuss your needs and decide whether they are the right person to assist you.

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