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Planning Parents
Over the last year I've met a number of gays and lesbians
who either already have or are about to take on the responsibility of
children. They are approaching me with many financial concerns, which
I would like to share with you. In this article I'll discuss the areas
that are relevant to your family and suggest ways of meeting those financial
needs.
These are a few of the most popular questions…
What will happen to my family should my partner die? How can I fund further
education fees in the future? Should we be starting a savings plan for
when they are eighteen?
Life Cover
It's wise to make provision should either of you die.
Many family units either rely on both partners earned income, or one working
while the other becomes a full time parent. These factors make the provision
of life assurance very important. The sum assured should be sufficient
to replace the lost income and designed to run through to an age at which
they are no longer dependent. It is also a good idea to insure that the
family's commitments such as a mortgage and/or loans are paid off. It
would be sensible to use an income figure of 5% for working out an appropriate
level of cover. For example to produce an income of £10,000 would
need a lump sum cover of £200,000. Or alternatively you could set
out the maximum amount of insurance for the budget you have available.
(Some cover is better than having none). 
Serious Illness
The financial effects of serious illness could be just
as great as if someone had died. A critical illness could either leave
one partner struggling to look after the children or the other unable
to work and supporting the family. It would be wise in these circumstances
to consider insurance that would pay a regular income (Permanent Health
Insurance), or one which pays a lump sum to clear any liabilities (Critical
Illness Cover).
PHI is aimed at providing long term accident and illness
protection in the event of you not being able to do your own kind of work.
This is normally designed to pay a percentage of your salary tax-free
and commences payment to you after a deferred period of 2,3,6 or 12 months.
Dependent on your needs this will commonly continue until retirement if
need be.
CI is designed to provide a lump sum benefit should
you suffer one of a long list of specified serious illnesses, such as
cancer, MS, stroke and heart attack. The definitions of these illnesses
can vary widely and it would be advisable to speak to a gay independent
financial adviser. The lump sum is again paid tax free upon diagnosis.
If you were to recover, the insuring company does not expect its money
returned.
Savings
Many parents may feel inclined to save money for their
offspring's future. The earlier that savings are made for education the
less of a strain the costs will be in the future. Of course further education
is not the only use for any savings in the future, provisions are just
as likely to be used for a wedding, deposit for a first home, or assistance
when starting work. There are many options for child savings with Individual
Savings Accounts, Unit Trusts and Baby Bonds all being popular. Why not
read our second feature in the series on "Investing For Children?"
Where do I get advice?
The only way to get truly impartial advice is to approach
an Independent Financial Adviser. They will be able to advise on the most
appropriate level of cover and source the most competitive products from
the whole market place.
Most of the gay parents that I've met have commented
on how difficult it is to find friendly advice. The best way to find an
adviser is by recommendation from family or friends. You should maybe
speak to them over the phone or arrange an initial meeting at their office.
(Most will not charge for this first meeting).
Most IFA's will have a firm grasp of your financial
needs, but will not have a knowledge of product providers that discriminate
against the gay community. If you specifically wish to avoid personal
lifestyle questions, increased premiums due to sexuality and HIV testing
(men only), you should approach a gay financial adviser. There are several
firms that cater for the community and they were all set up with gays,
and gay parents, in mind.
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