1.5 Determining Protection Requirements
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Protection requirements will depend on a variety of factors.
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Perceived Risk. If the client is not aware of the risk,
or is unwilling to acknowledge its importance, it is unlikely that
any action will be taken to minimise it.
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Age. Requirement will change with age, because in general
we follow a 'pattern' over our lifetime during which our responsibilities
change, the demands made upon us vary, and our wants and needs change
in line with dependants, income and our financial fortunes.
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Dependants. Protection requirements will depend on the number,
age and the level of care required of us. They could vary from babies,
adolescents and college students, through the disabled to the physically
infirm caused by age.
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Income. The greater the earned income, the greater the likelihood
of protection need if the earned income is the only source of support.
Additionally, of course, the amount of disposable income will be
the ultimate determinant.
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The actual amount required will depend on the individual circumstances,
but a reasonable rule of thumb would be to take a multiple of income
and reduce it by the amount of benefits available from other sources
e.g. State, other policies, pension schemes, compensation. It might
be reasonable also to take into account any reduction in outgoings
resulting from death.
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Financial Liabilities. Generally, they can be assessed
under the following headings:
- Income - all sources. Maintenance of the flow may be considered
a liability.
- Expenditure - all avenues, out of income or capital
- Assets - current and potential future. Maintenance may be considered
a liability.
- Liabilities - current and potential future
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