Compensation Payouts May Rise, But Specialist Financial Advice Remains Key
Recently, the Ministry of Justice announced a change in the way compensation payments for those who suffer long-term injuries are calculated by slashing the ‘discount rate’ for the first time since 2001. The ruling is likely spell higher insurance premiums and has incurred the wrath of insurers, but is expected to result in significantly higher pay-outs for victims of personal injuries.
While larger pay-outs would obviously provide a greater degree of financial security for victims, it is still imperative they have a structured plan in place, as Andy Cowan – head of financial planning at Tilney – outlines.
“For those who suffer catastrophic long-term injuries this ruling could mean that they get materially higher pay outs than we have seen in past years. However, it is still imperative that anyone who finds themselves in such circumstances has a specialist financial plan in place that carefully examines income and expenditure to model future cash flow needs and then builds an appropriate investment portfolio.
“Compensation is usually given to make up for a loss of earnings through the duration of your working life, and therefore you need to ensure that the money you receive doesn’t run out too soon.
“Claimants need to be aware that the story doesn’t end with a financial lump sum. Getting dedicated financial advice from a planner who specialises in personal injury or clinical negligence is essential to ensure there is a plan in place, giving you peace of mind for the future.”
(Source: Tilney Group)