Ray McHugh, IFA Barnet- Review your life insurance as bereaved benefits change

Friday 9 June, 2017

Ray McHugh, independent financial adviser, Barnet, North London and member of the North London financial planning team said:

‘When our independent financial advisers meet clients for a financial planning meeting one of the key tasks is to ensure that the client’s family has sufficient and adequate life insurance cover.  Recent changes to the benefits that are available to bereaved families will make it even more important to now consider family protection.’

Changes to the Bereavement Support Payment (BSP)

The government has recently replaced a range and suite of bereavement benefits with a single benefit called the Bereavement Support Payment (BSP).  The payment is available to anyone under state pension age whose spouse or partner (civil partner) dies on or after 6th April 2017.  The BSP provides an initial lump sum followed by up to 18 monthly payments, the size of these is determined by the individual’s circumstances.  Where dependent children (those under 20 years old and in full-time education) are involved the lump sum payment is £3,500 with monthly payments of £350.  The maximum total amount payable is £9,800.  For anyone without children under 20 in full-time education the lump sum payable is £2,500 and £100 monthly is available making a maximum total payment of £4,300.

The previous benefit payments for bereaved partners or spouses entitled an eligible individual to receive one or more of three benefits.  A bereavement payment of £2,000 tax free and the potential to receive a Widowed Parent’s Allowance if you had a dependent child.  This entitlement was worth £113.70 per week until child benefit ceased.  An individual without a dependent child was entitled to an allowance which was paid for 52 weeks depending upon the age of the surviving spouse/partner.

Ray McHugh, independent financial adviser, Barnet, North London and member of the North London financial planning team said:

‘For anyone who has dependent children financial support following a bereavement will now be greatly reduced as benefit payments are now restricted to an 18 month period.  The maximum payment that a bereaved spouse/partner with dependent children can receive under the new benefit system is £9,800.  Under the previous benefit system an individual in the same position could potentially have received up to £119,250 if payment was received for the maximum 20 year period.  Although the system has been simplified the benefits have been reduced.  We recommend that when our clients have their next financial review they consider family protection within the context of these changes.  If you haven’t got life assurance in place or you now need to review it Lonsdale Services offer a FREE initial one hour financial planning consultation for new clients.  We will discuss a range of protection policies with you including your requirement for life insurance.  We work with you to determine the level of cover you require, the length of time you need protection so you can plan your finances accordingly.  To book an appointment email us at enquiries@lonsdaleservices.co.uk

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