Howard Wright FAQs

The main differences between whole-of-life assurance and term life assurance are:

• Coverage duration:
• • Whole-of-life assurance: Provides coverage for your entire lifetime.
  • Term life assurance: Offers coverage for a specified term, such as 10, 20, or 30 years.
• Premiums:
  • Whole-of-life assurance: Typically has higher premiums due to the guaranteed payout.
  • Term life assurance: Usually has lower premiums since it only covers a set period.
• Payout:
  • Whole-of-life assurance: Guarantees a payout upon death, regardless of when it occurs as long as premiums have been maintained.
  • Term life assurance: Only pays out if death occurs within the specified term.
• Investment component:
  • Whole-of-life assurance: Can include a savings or investment component, allowing the policy to build a cash value over time.
  • Term life assurance: Purely insurance, with no savings or investment component.

To find the best life assurance policy for your needs, consider the following steps:

• Assess your needs: Determine the amount of coverage you need, the length of time you need it, and any specific requirements (e.g. covering a mortgage, providing for dependents).
• Compare policies: Consult with multiple insurers to compare premiums, coverage options, and policy features.
• Read the fine print: Understand the terms, conditions, and exclusions of each policy.
• Check the insurer’s reputation: Look for insurers with strong financial ratings and good customer reviews.
• Consult a financial adviser: Seek advice from a qualified financial adviser who can help tailor a policy to your specific needs and circumstances.

When choosing a financial adviser, consider the following factors:

• Qualifications: Ensure the adviser is properly qualified and registered with relevant professional bodies.
• Experience: Look for an adviser with experience in life assurance and a track record of helping clients with similar needs.
• Reputation: Check reviews, testimonials, and references to gauge the adviser’s reputation.
• Fee structure: Understand how the adviser is compensated (e.g., fee-based, commission-based) and ensure there are no hidden costs.
• Personal rapport: Choose an adviser with whom you feel comfortable discussing your financial situation and goals.
• Transparency: Ensure the adviser provides clear, unbiased information and explains the pros and cons of different policies.

Yes, there can be tax benefits associated with life assurance policies, such as:

• Policy proceeds: In many cases, the payout from a life assurance policy is not subject to income tax.
• Inheritance tax: If the policy is written in trust, the payout may be excluded from your estate for inheritance tax purposes, potentially reducing the tax burden on your beneficiaries.
• Tax-deferred growth: Whole-of-life policies with an investment component may allow the cash value to grow on a tax-deferred basis.
• Premiums: In some cases, premiums paid for life assurance policies may qualify for tax relief.

Critical illness cover can be added to a life assurance policy as an additional benefit or set up as a stand alone policy, providing the following features:

• Coverage: Pays out a lump sum if you are diagnosed with a specified critical illness (e.g., cancer, heart attack, stroke). Each provider may have different illnesses that they will pay out for.
• Combined or standalone: Can be purchased as a standalone policy or combined with a life assurance policy.
• Payout: If a critical illness claim is made, the policy pays out the specified amount, which can be used for medical expenses, lost income, or other needs.
• Impact on life assurance: Depending on the policy, a critical illness payout may reduce the life assurance benefit, or the policy may terminate after the critical illness benefit is paid.

Income drawdown allows retirees to withdraw money from their pension pot as needed, rather than purchasing a fixed income in the form of an annuity. This method provides flexibility by:

• Control over withdrawals: You can decide how much and when to withdraw your funds, allowing you to manage your income based on your needs.
• Investment growth: The remaining pension pot stays invested, potentially growing and providing more income over time. It’s important to remember your funds could fall in value however, possibly reducing the sustainable income or leading to your funds being depleted before your average life expectancy.
• Adapting to changes: You can adjust your drawdown withdrawals based on changes in your financial situation, health, or lifestyle whenever you would like.

While income drawdown offers flexibility, it also comes with risks:

• Investment risk: The value of your pension pot can go down as well as up, depending on the performance of your investments.
• Longevity risk: There’s a risk of outliving your pension pot if withdrawals are too high or investment returns are lower than expected.
• Market fluctuations: Market volatility can impact the value of your investments, especially if withdrawals coincide with market downturns.
• Complexity: Managing an income drawdown strategy can be complex and may require ongoing monitoring and adjustments.

To make your income drawdown tax-efficient, consider the following:

• Personal allowance: Withdraw amounts that keep you within your annual personal allowance to minimise tax.
• Tax-free lump sum: Take advantage of the 25% tax-free lump sum available from your pension pot. This doesn’t need to be fully withdrawn on day one. If you have no capital requirements you could draw this periodically or as a tax free monthly income.
• Tax brackets: Plan withdrawals to avoid moving into a higher tax bracket.
• Professional advice: Consult with a financial adviser to develop a tax-efficient withdrawal strategy tailored to your circumstances.

When choosing an income drawdown strategy, consider the following factors:

• Retirement goals: Define your financial goals and how income drawdown fits into your overall retirement plan.
• Withdrawal rate: Determine a sustainable withdrawal rate that balances your income needs with the longevity of your pension pot.
• Investment strategy: Choose an investment strategy that aligns with your risk tolerance and income requirements.
• Fees and charges: Be aware of the fees and charges associated with your pension plan and investments, as these can impact your overall returns.
• Health and life expectancy: Consider your health and potential life expectancy when planning withdrawals to ensure your funds last throughout retirement.
• Regular reviews: Regularly review and adjust your drawdown strategy based on changes in your financial situation and market conditions.

A trust deed is a legal document that outlines the terms and conditions of a trust. Most life assurance providers will have a trust form that you can complete to make the process as simple as possible. However, the key elements that must be included in a trust deed are:

• Trust name: The official name of the trust.
• Trustees: Names and details of the trustees who will manage the trust.
• Beneficiaries: Names and details of the beneficiaries who will benefit from the trust or for a discretionary trust you could use a class of beneficiaries such as “my children”.
• Trust property: Description of the assets or property included in the trust.
• Purpose of the trust: The specific purpose or objectives of the trust.
• Trustee powers and duties: Detailed description of the powers and duties of the trustees.
• Distributions: Instructions on how and when the trust assets will be distributed to beneficiaries.
• Duration of the trust: The period for which the trust will exist.
• Amendment and termination: Procedures for amending or terminating the trust.

Trustees have several obligations regarding trust accounts, including:

• Record-keeping: Maintaining accurate and detailed records of all transactions and decisions related to the trust.
• Financial reporting: Preparing regular financial statements and reports for the trust if required.
• Accountability: Being accountable to the beneficiaries and providing them with information about the trust’s financial status and administration.
• Compliance: Ensuring the trust complies with all legal and regulatory requirements, including tax filings and other statutory obligations.
• Prudent management: Managing the trust’s assets prudently and in the best interests of the beneficiaries.
• Independent auditing: In some cases, having the trust accounts independently audited to ensure accuracy and transparency.

Having a trust deed in place before establishing a trust is crucial for several reasons:

• Legal framework: It provides a clear legal framework that defines the trust’s purpose, terms, and conditions.
• Clarity and certainty: It ensures that all parties involved understand their rights, responsibilities, and expectations.
• Conflict resolution: It helps prevent disputes by clearly outlining the roles and duties of trustees and the rights of beneficiaries.
• Asset protection: It safeguards the trust assets by detailing how they should be managed and distributed.
• Regulatory compliance: It ensures the trust complies with relevant laws and regulations from the outset.
• Effective administration: It facilitates the efficient and effective administration of the trust by providing clear guidelines and instructions.

Trust documentation plays a critical role in ensuring compliance with tax laws by:

• Defining tax responsibilities: Clearly outlining the tax responsibilities of the trust and the trustees.
• Accurate record-keeping: Ensuring that accurate financial records are maintained, which is essential for tax reporting and compliance.
• Tax planning: Providing a framework for effective tax planning to optimise the tax position of the trust and its beneficiaries.
• Regulatory adherence: Ensuring that the trust adheres to all relevant tax regulations and filing requirements.
• Transparency: Promoting transparency in financial transactions, which is crucial for tax audits and reviews.
• Legal protection: Minimising the risk of legal issues or penalties related to non-compliance with tax laws.

When choosing an income protection policy, consider the following key factors:

• Coverage level: Ensure the policy covers a sufficient percentage of your income, typically upto 60-65%. Should you not require the full cover, perhaps due to a high disposable income, you could choose a lower cover value to reduce the cost of the premiums
• Definition of disability: Understand how the policy defines disability and under what conditions benefits are paid.
• Deferral period: Check the waiting period before benefits begin, ranging from 14 days to several months.
• Benefit period: Determine how long the policy pays benefits, which could be a few years or until retirement.
• Premium type: Choose between guaranteed premiums (fixed) and reviewable premiums (can increase over time).

To book your free initial consultation with one of our Chartered advisers, you can call us on 0345 688 4939 or message us through our enquiry form here. We look forward to hearing from you and seeing how we can help.

Income protection and life insurance serve different purposes:

• Income protection: Provides regular payments if you are unable to work due to illness or injury, helping you maintain your standard of living.
• Life insurance: Pays a lump sum or income to your beneficiaries in the event of your death, providing financial support to your loved ones.
• Focus: Income protection focuses on maintaining your income during periods of ill health, while life insurance focuses on financial security for your dependants after your death.

A financial adviser is someone who works with you to achieve your financial objectives. A financial Adviser should provide advice to protect you and your family should the worst happen and implement a plan to enable you to have a successful retirement. They should also maintain regular contact with you and regularly review your financial plan to ensure it’s on track to achieve your objectives. A good financial adviser will also assess your entire financial position highlighting any additional areas for consideration such as Estate Planning.

Income protection policies will be medically underwritten may providers may place exclusions on your insurance such as:

• Pre-existing conditions: Illnesses or injuries you had before taking out the policy may be excluded.
• Certain medical conditions: Some policies exclude specific conditions like mental health issues or back pain.
• Risky activities: Injuries resulting from high-risk sports or activities may not be covered.
• Substance abuse: Disabilities arising from drug or alcohol abuse are often excluded.
• Non-disclosure: Failing to disclose relevant information when applying can lead to exclusions or denial of claims.

At Howard Wright, we provide financial advice to a wide range of clients from individuals, families and businesses.

The approval process for income protection can vary, but typically takes:

• Initial application: Completing the application can take a few hours to a few days, depending on the complexity.
• Underwriting process: The insurer reviews your medical history, occupation, and lifestyle, which can take several weeks.
• Medical exams: If required, scheduling and completing medical exams can add a few weeks.
• Approval: Overall, the process usually takes 4-6 weeks, but it can be quicker or slower depending on individual circumstances.

What makes us different to most financial advisers is our approach. We are a family run firm who have been providing financial advice since 1982 with a presence in the West Midlands for over 90 years. We work directly with our clients to achieve their financial objectives.

We believe that to have a successful financial plan it must be reviewed periodically.

Our Chartered status, the gold standard of our industry assures our clients that our advice is of the highest quality. We are also rated as one of the FT Advisers Top 100 firms for 2021 giving even more confidence to our current and prospective clients.

Yes, you can still get income protection if you have a pre-existing condition, but:

• Disclosure: It’s crucial to disclose all pre-existing conditions accurately when applying.
• Exclusions: The insurer may exclude the pre-existing condition from coverage or charge higher premiums.
• Specialist policies: Some insurers specialise in covering individuals with pre-existing conditions and may offer more favourable terms.
• Medical underwriting: The insurer will assess the severity and stability of your condition before making a decision.

A Chartered Financial Adviser is the gold standard of our industry and assures our clients that our advice is of the highest quality.

We have our very own Howard Wright Portal which we have been developing over the last 2 years.

The Howard Wright Portal is designed to enable us to communicate with our clients securely and efficiently. It also plays a key part in reducing our carbon footprint and gives clients access to the value of their investments 24/7.

The earlier you start to plan for your future the greater your financial future will be.

After we leave school the world of finances quickly becomes part of everyday life. In most cases from the age of 18, you need to manage your own finances, credit cards, student loans, car finance alongside budgeting and learning about tax, savings & borrowing.

Once you have progressed further, the next priority is planning for the future. Therefore financial advice is so important when making life’s biggest decisions. It’s never too late to seek financial advice as getting the most out of your savings in later life is just as important as starting from a young age.

As of the current tax year, the inheritance tax (IHT) rates in the UK are:

• Nil-rate band: The first £325,000 of an individual’s estate is tax-free.
• Residence nil-rate band: An additional £175,000 may be available if the deceased leaves their home to direct descendants, such as children or grandchildren, bringing the potential tax-free threshold to £500,000 for individuals and £1 million for married couples or civil partners. The Residence Nil Rate Band is reduced if the total estate is over £2,000,000
• Above the nil-rate band: Any amount above nil rate band and available residence nil rate band is taxed at 40%.

At Howard Wright, the key ingredient to our service is regular communication. We believe that to have a successful financial plan, regular reviews of your financial position and objectives are a must. This is to ensure you are always targeting your objectives as your financial position changes as you progress through life.

There are several strategies to reduce your inheritance tax liability, including:

• Gifting: You can give away up to £3,000 each year and immediately fall outside of your estate. There are additional allowances for weddings. Larger gifts will not fall outside of the estate immediately, but may be exempt from inheritance tax if you live for seven years after making them.
• Gifting from regular income: You can make regular payments to another person, for example to help with their living costs. There’s no limit to how much you can give tax free, as long as:
  • You can afford the payments after meeting your usual living costs
  • You pay from your regular monthly income
• Trusts: Setting up a trust can help remove assets from your estate, although these will follow the same rules as making gifts to individuals in that the money gifted to a trust, in excess of the gifting allowance, will still be included in the inheritance tax calculations for up to the first 7 years. Depending on the trust type used, there may also be immediate tax charges. A discounted gift trust may offer some immediate relief for inheritance tax.
• Charity donations: Gifts to charities are exempt from inheritance tax, and if you leave at least 10% of your net estate to charity, the IHT rate on the remainder of your estate can be reduced to 36%.
• Life insurance: Whilst this doesn’t reduce the inheritance tax liability, taking out a life insurance policy written in trust can provide a lump sum to cover the tax liability.
• Pension funds: Pension funds are typically not included in your estate for IHT purposes, so leaving money in your pension can be tax-efficient.
• Spousal exemption: Transfers between spouses or civil partners are exempt from IHT.
• Business relief: Trading businesses may be exempt from inheritance tax. There are also some financial products which make use of the rules about what does and doesn’t qualify for business property relief. Using these types of products can be high risk compared to more traditional collective investment funds however, invested funds could be inheritance tax exempt after 2 years.

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Inheritance tax on jointly owned property depends on how the property is owned:

• Joint tenants: If the property is owned as joint tenants, the deceased’s share passes automatically to the surviving owner(s), and the value of the deceased’s share is included in their estate for IHT purposes.
• Tenants in common: If the property is owned as tenants in common, the deceased’s share does not pass automatically to the other owner(s) but according to their will. The value of their share is included in their estate for IHT purposes.

There is however no inheritance tax between spouses. It’s important to plan how jointly owned property will be handled in the context of inheritance tax to minimise your liability.

Business Relief (BR) can reduce the value of a business or its assets when calculating inheritance tax:

• Qualifying assets: Shares in an unlisted or AIM listed company, an interest in a business (such as a partnership), or some types of farmland or woodland can qualify for relief.
• Relief percentage: 100% relief is available for qualifying businesses, and 50% relief is available for certain other assets, such as property and machinery used by the business.
• Ownership period: The business or asset must have been owned for at least two of the last 5 years before death to qualify for BR.

Business Relief can be a valuable tool in reducing the inheritance tax liability on business assets, but it is essential to ensure the business qualifies and meets all the criteria.

Not everyone needs a Financial Adviser but, in most cases, a financial adviser can add invaluable knowledge that can not only save you money but also make you money.
Decisions such as retirement, purchasing a property, drawing your pension are all major financial decisions. It’s often said a professional opinion can be invaluable.

The cost of advice will be dependent upon the areas of our services you require. Our initial consultation is free of charge and once we have an understanding of your objectives and requirements, the charges for the services you require will be provided in writing before any business is transacted.

This is one of the most common questions we are asked by our prospective clients looking for financial advice.

To answer this question, we take a holistic approach.

At the initial stages of working with new clients, we discuss your retirement objectives.

• What do you want to do with your life after work?
• Have you been saving for a retirement gift such as a holiday home, caravan, trip of a lifetime?
• Do you want to help your children or grandchildren financially in the future?

All these questions contribute to the advice we give and allows us to answer the question of when you can afford to retire. To discuss your retirement with one of our Chartered Advisers click here.

When choosing a financial adviser, you need to consider several factors.

1. What do I need from my financial adviser?
   You may require an adviser who is a specialist in a certain area.
2. How much are you looking to invest?
   Some firms have a minimum amount of investment to enable you to become a client of theirs. A good financial adviser can help you to understand what you need to invest to meet your financial objectives.
3. Positive feedback is crucial when looking for a highly rated financial adviser as this will give you peace of mind. Look at reviews, positive feedback such as testimonials and client stories.
4. Look at the structure of the firm, are they going to be around in the next 10 years? You don’t want your adviser to be retiring the year after you join them having to go through the process of looking for a new financial adviser all over again.
5. Transparency – Is the adviser open and honest with what they are charging you. Make sure the adviser explains fully what they will be charging and how you will be charged, the last thing you want are hidden fees.
6. Accreditation are they a Chartered firm, have they been given any industry awards such as the FT Adviser Top 100 status? Awards give you a great insight into how the firm is run and what its clients think of them.

Yes, we do provide advice on Pensions, more specifically Personal Pensions, pension annuities, SIPP’s, SAP’S and drawdown. We advise on both accumulation and decumulation, including the phasing of pensions. To discuss your pension options with one of our Chartered advisers click here or call 0345 688 4939.

Yes, you can purchase life cover through Howard Wright. Our team will discuss your circumstances, obtain your objectives enabling us to recommend the protection product or combination of products, that will work best to protect you and your family should the worst happen. To discuss your protection options with one of our Chartered advisers click here or call 0345 688 4939.

At Howard Wright, we provide mortgage advice to our clients. Our team will work with you to establish what mortgage will suit you and your family the best, whether a fixed, capped or a variable rate product. To discuss your Mortgage options with one of our Chartered advisers click here or call 0345 688 4939.

Most people associate an annuity as a contract that is in place for life however, it is possible to utilise a fixed term annuity which, as the name suggests, provides a guaranteed income for a specific period of time, with a predetermined guaranteed value at the end.

Fixed-term annuities offer several benefits:

• Predictable Income: They provide a guaranteed income for a specific period, which can help with budgeting and financial planning before other pensions, such as the State Penson or defined benefit pensions become payable.
• Flexibility: You can choose the term length that best suits your financial needs, typically ranging from 1 to 30 years.
• Security: The payments are not affected by market fluctuations, offering peace of mind.
• Potential for Higher Returns: Compared to other low-risk investments, fixed-term annuities can sometimes offer higher returns due to the fixed interest rates.
• Guaranteed Maturity Value: If you do not require the full income your pension could provide over the fixed period, you could set up a lower income and receive a pre determined value back at maturity.

Selecting the right annuity involves several steps:

• Assess Your Financial Goals: Determine your retirement income needs and how an annuity fits into your overall financial plan.
• Understand Different Types: Learn about the different options available to you when setting up your annuity such as level or indexed payments, spouse benefit or single life, guarantee period or no guarantee period to see which aligns with your risk tolerance and income requirements.
• Consider Provider Reputation: · Consider Provider Reputation: Choose a financially stable and reputable company and ensure they qualify for the relevant protection schemes.
• Seek Professional Advice: Consult with a financial adviser to ensure the annuity matches your long-term goals and financial situation.

When selecting an annuity, consider the following factors:

• Type of Annuity: Decide between level or indexed linked payments to provide an inflation proofed income based on your income needs and risk tolerance.
• Payout Options: Choose between lifetime income, fixed-term, or joint survivor options or guarantee periods.
• Fees and Charges: Be aware of any set up fees including those of the adviser
• Inflation Protection: Consider if the annuity adjusts for inflation to maintain your purchasing power over time.
• Financial Stability of Provider: Select an insurance company with a strong financial rating to ensure they can meet their payout obligations and ensure they qualify for the relevant protection schemes.
• Tax Implications: Understand how the annuity payments will be taxed, both during the accumulation phase and the payout phase.

Annuities do carry some risks, including:

• Inflation Risk: Fixed payments may lose purchasing power over time if they do not adjust for inflation.
• Rate Risk: The annuity will be set in stone once you purchase this and as such you would not benefit from possible future increases in annuity rates. This can also work to your advantage if the annuity rate is reduces after you have purchased your income.
• Shortfall Risk: If your income needs fluctuate or increase over time, over and above any indexation you have added you may find that your income needs are not met unless you have an alternative way to provide this.