Critical illness cover provides a lump sum payment in the event of certain serious illnesses, such as cancer, heart attack, stroke and many others.

AXA’s plan uniquely offers something called Total Mastectomy Cover. The following is taken from AXA’s Critical Illness Guide.

Cancer is covered in AXA’s Critical Illness contract as long as it meets various minimum standards. The issue with breast cancer is that about 30% of tumours are ‘cancer in situ’ a very early stage of the disease before it has become invasive and with very high survival rates (97+%).

Cancer in situ (carcinoma in situ) is not covered under ABI Critical Illness definitions. However, in about 20% of cancer in situ cases the treatment recommended includes ‘total mastectomy’ i.e. removal of the breast in which the tumour exists.

AXA’s total mastectomy cover is intended to pay out to cover these situations where the client would have no other cover through their Critical Illness contract. We will pay out 20% of the sum assured to a maximum of £15,000.

The cover is free, we do not load the premium for it and a payout will not reduce the sum assured for any subsequent valid Critical Illness claim (important if you need to cover a mortgage for instance).

The money could be used to pay for reconstructive surgery, or to take time out to recuperate/holiday.

68% of female Critical Illness claims are cancer related and breast cancer in particular is very high profile these days – so for single life female clients or a joint life cases AXA’s Critical Illness product certainly has something extra to offer.

If you intend to retire at age 50 you should act fast or face a five-year wait to access your tax-free cash.

That is because from 6th April 2010 the age at which you can take pension benefits rises from 50 to 55. That may sound some way off, but the planning involved means you should start thinking about it now.

Anyone aged 50 prior to 5th April 2010 will be able to take their retirement benefits from their pension, but if they do not act before this date their money will be tied up for a further five years.

The change not only affects those who want to retire early, but also those who want to unlock their 25% tax-free cash and leave the rest invested while they continue to work.
Many people earmark this cash to clear the mortgage, pay education fees or even to help their children buy their first home.

There are vast numbers of people who have been told that they can take their benefits from age 50. It is imperative they start planning now.

Higher Rate Tax Payers

The rule change is also of concern to higher-rate taxpayers who want to maximise their 40% tax relief.

Pension contributions are now limited to 100% of income, subject to a cap of £235,000.

For anyone who has reached age 50 (or 55 from 2010), pensions offer a useful way of obtaining tax relief, generating an astonishing 114% return with no investment risk.

For example, a higher-rate taxpayer who puts £80,000 cash in a pension will immediately have it grossed up to £100,000 with basic-rate tax relief. He can also claim a further £20,000 tax relief back from the Inland Revenue, reducing the net cost to £60,000. (Please note that higher rate tax payers should the contact HM revenue and Customs to obtain the extra relief that is currently available which comes in the form of either a tax refund or an adjustment to their PAYE code. Higher rate taxpayers will receive tax relief at their highest marginal rate of tax).

Under present rules, at the age of 50 he can then take benefits immediately, giving himself a quarter of the £100,000 pension fund as tax-free cash, refunding a further £25,000 from his original outlay. He is now in the position of having a pension pot of £75,000 for a net outlay of just £35,000 – a return of 114%.

You do not have to use the remaining fund to buy an annuity until age 75. The fund can remain invested in an income drawdown plan. Here, there is no obligation to draw an income unless you chose to do so.

It is generally a good idea for investors to use their annual ISA allowance, but for some it may make sense to transfer ISAs and other shares into a SIPP (Self Invested Personal Pension) as they near retirement. This makes sense particularly for higher-rate taxpayers who would benefit from 40% tax relief.

Workers can take out a SIPP alongside their company schemes to take full advantage of these rules.

Phased Retirement

This rule change will also affect those people who have planned to reduce their hours at work and take phased retirement over a number of years.

With phased retirement, a proportion of tax-free cash and pension income is taken each year, whilst leaving the remaining pension fund invested. Anyone in phased retirement not reaching 55 by 5th April 2010 will have to rethink their plans.

The change is also expected to affect employers who are considering redundancies. A payoff will look more attractive with early retirement thrown in as well.

Taking pension benefits early is not for everybody, but if you had been expecting to access your tax-free cash at 50, you need to consider exactly where you stand. Five years could feel like a long wait for your money.

‘If you have life cover, it should be sufficient to look after your family.’

I cannot emphasise enough the need for life cover. It’s the single most important step in financial planning. I like to ensure that my clients have the right protection for their families at the right price. With the Professional Wealthcare quotation facility, it’s quite simple to shop around and do comparisons for yourself.

The quotation facility allows you to compare, without any obligation to buy, the premium rates of a number of Life Assurance companies. It calculates the premiums based upon your own needs and circumstances.

For quotation facility, please click on the following link:

http://www.professional-wealthcare.co.uk/ecomm_hold.htm?cp=LIFE

Since the introduction of stakeholder pension plans during 2001, pension providers have continuously redesigned their plans in order to attract and retain new business.

The advantages to policyholders have been dramatic, particularly with charge reductions. Typically, a stakeholder pension plan will charge only 1% of the fund value per year, which represents a significant reduction against older traditional pension plans.

However, stakeholder plans have become increasingly restrictive in terms of investment fund choice.

Some providers have also developed extremely useful non-stakeholder personal pension plans where charges are kept low, but which also provide access to leading fund managers offering clients increased choice and the potential for greater investment growth.

It is important to remember, that a pension plan is an investment – Probably, the most important investment you will make.

Fund selection is a crucial aspect to pension planning and should be revisited periodically. For this reason it is important that your pension fund is periodically reviewed in order to identify whether improvements can be made, that will either increase the potential for fund growth, reduce your plan charges, or both.

On 6th April 2006, pension legislation underwent the most radical overhaul in recent history. This new regime impacts on all pension investors and gives further reason to review those pension plans.

At Professional Wealthcare in Camberley, we have been looking after our clients pension assets for many years. We find that people often have an array of funds from old employer schemes, or perhaps from contracting out of SERPS many years ago. For the client, this can seem like a ‘minefield’ of confusing facts and figures. We believe that with careful planning, significant improvements can be made to safeguard your future wealth and to simplify your retirement plans.

Further information can be obtained by calling our office on 01276 517700, or by emailing advice@professional-wealthcare.co.uk

Professional Wealthcare is an appointed representative of IN Partnership, the trading name of The On-Line Partnership Limited, which is authorised and regulated by the Financial Services Authority.