The Life Cycles That Impact Protection Levels
Both CF1 and R01 use the concept of life cycles to illustrate factors that impact on the level of protection required. Whilst acknowledging that fewer families are conforming to these traditional and conventional structures, they describe the various life cycles as ‘vulnerable’ ‘relaxed’ and ‘anxious’. Here, we explain these life cycles further to help with your CII CF1, R01, R05 or R06 exam revision.
The Vulnerable Years
This term is used to describe the early years of marriage or other long-term relationship and perhaps the starting of a family. This is where incomes are at their lowest and yet protection needs are high. Couples may have little spare income to use on paying for life cover premiums when they are concentrating on mortgage or rent and other living expenses.
In these circumstances, low-cost term insurance products should meet immediate protection needs at relatively low cost.
The Relaxed Years
This term is used to describe those aged 40 and over, when it is assumed that individuals and/or couples have higher salaries and increased disposable income. If they have had children, these may be close to being financially independent. As the children leave home, thoughts turn to investing more in their retirement income as well as protecting a partner.
Both CII CF1 and R01 use the concept of life cycles to illustrate factors that impact on the level of protection required. Here, these life cycles are explained in further detail. Click To Tweet
The Anxious Years
These are the years used to describe when individuals reach their 50’s and older, when the mortgage may almost or already be cleared and the children are likely to have left home with financial independence. Disposable income is likely to be at his highest as earning potential peaks. However, the anxiety levels may be increasing due to family members or friends becoming ill or even dying, where retirement is not quite as far away as it once seemed and the pension pot really needs expanding. Inheritance tax planning and long-term needs may also need addressing.
As mentioned, this life cycle route follows a very conventional journey. With divorce rates high and the numbers of people choosing to live alone, new challenges are being faced with those affected having to re-look at their financial future and adjust to their new reality.
Grab the resources you need!
If you’re studying for your CII R01 exam, and you’re wanting a feeling of confidence on exam day, grab our free taster to try out one of Brand Financial Training’s calculation workbooks for yourself. Click the link to download the R01 mock paper taster now!
Alternatively, you can download the taster for CF1, R05 or R06 if you’re studying for any of those exams.