Financial Review – Mr & Mrs W

Having a full financial review has many benefits. First, you need to decide whether it is right for you and your situation. This Case Study shows the type work and planning we carried out for Mr & Mrs W in their financial review.

Use This Case Study As A Guide To A Financial Review

Their Situation

• Married with two children.
• Relying on Mr W’s sole income for the last 7 years.
• About £5,000 in general savings.
• £180,000 mortgage on a Pure Interest Only Basis.

Mr W had recently received a promotion at work. He now has an additional £800 per month take-home. Consequently, he wanted to use this allowance to address their financial needs.

Their Financial Needs

After a detailed discussion. These were established to be:

• To provide financial security in the event of death, serious illness or long term disability.
• Wants to ensure the mortgage is paid off by the time they retire. (In 22 years time).
• To provide funds for when their two children go to University.

The Next Step

First, we established the benefits Mr W had through his employer.

Next, we agreed on their ‘Medium to High’ attitude to risk.

Third, we discussed their investment term.

Financial Review Outcome

Joint Life Level Term Assurance Policy

A Joint Life Level Term Assurance Policy for £180,000 over a 22 year term. This is to ensure their mortgage would be repaid in full in the event of either party’s death, during the 22 year mortgage term.

Stocks & Shares ISA

With a ‘Medium to High’ attitude to risk, we established a regular savings Stocks & Shares ISA. This is in Mr W’s sole name and projected to repay their mortgage over a 22 year term.

Income Protection

Income Protection for Mr W that will pay 60% of his salary in the event of him being off work for 26 weeks. In addition, his Employer will pay him for the first 26 weeks. The policy will pay out the required level of income, until such time as he returns to work or his selected retirement age.

Joint Life Family Income Benefit Policy

This policy will provide £15,000 per annum in the event of either party’s death during the next 15 years. This will provide some financial security for the surviving spouse. Also for the children in the event of either spouse dying before their youngest child is 21 year old.

Whole of Life Critical Illness Policy

We also set up a stand alone Whole of Life Critical Illness Policy. This was set up on a joint life basis and was written on an ‘Ultimate Cover’ basis. The design of this policy is to pay out a lump sum, to either party, in the event of the first valid claim on diagnoses of a critical illness. Furthermore, we included ‘child cover’ so that a specified amount could also be claimed in the event of either child being diagnosed with a critical illness.

Addressing the University Funding Requirements

Finally, we utilised part of the £3,600 annual tax-free Junior ISA allowance for their youngest child and incremented the Child Trust Fund allowance for their other child. This allowed them to save a regular amount and build up a flexible tax-free sum.

Changes in legislation and tax can impact on the advice that we give to our clients. This case study is not guaranteed to work in all circumstances and is intended to be a guide.

Please remember that the value of investments can fall as well as rise.