Mortgage & Financial Protection
Insurance is one of those necessary evils in life. No one likes paying for it until they need to make a claim and at that point they then realise the importance of insuring against the worst happening. Being confident that you are invincible is a great way to view life, however it’s always best to have a contingency in place should you need it. For example, have you ever sat down and thought how you would pay your mortgage if you could not work? Or if your family could stay in the family home if you or a spouse were not around anymore? Below we will give you a brief summary of the types of cover available to you and your family, lot of these policies are tax free when they pay out. Call us to discover more, we can offer you full advice and comparisons on the options available and if you already have cover then we may be able to find the same cover for a lower price or with better definitions.
This is the basic cover that everyone taking out a mortgage should have. This provides a tax free cash lump sum to clear the mortgage debt or leave a legacy to family and is relatively cheap in this day and age. You can have two types of life cover, Level term which pays out the original sum insured if a claim is made which in a lot of cases means there is also some funds left, over and above the clearing the mortgage debt. Decreasing term cover which is cheaper will simply clear the mortgage balance outstanding. We can also arrange for the policies to be placed into a Trust which can possibly reduce inheritance tax liabilities and mean that in the event of a claim funds are released quicker than they are if it went through the usual probate channels.
There are a few policies that can be considered under the heading ‘income protection’ such as – income protection itself, mortgage payment protection and accident, sickness and redundancy cover. Essentially all of them are designed to protect your lifestyle and standard of living should your income stop by providing a monthly income to you. In our view, this is THE most important cover for clients to take as if your income stops everything else stops with it. In this day and age almost everyone pays the monthly bills through Direct Debit, the salary comes in and the direct debits go out and you then have the surplus to live off for the rest of the month. Imagine if your income stopped, how would you then continue to pay the monthly bills?
Family Income Benefit
Having the mortgage paid off if you were to pass away is essential but ask yourself how this – how would your family then cope with the loss of that monthly income? Many people assume “Death in Service” will provide the security but even if you are lucky enough to have that benefit with your employer, it typically only pays out a maximum of 4 times your salary – what would happen to you after that? Family Income Benefit is designed to provide an income to your family which can be for any amount and term you specify. This could then be used to pay for extra childcare, utility bills, essential expenditure etc, whilst the remaining spouse may continue to work or to provide for school fees or University in the future or just supplement day to day living for your family and keep them accustomed to the lifestyle they know.
Critical Illness Cover
This provides a lump sum pay out in the event of you being diagnosed with one of a number of critical illnesses-most providers cover around 47 different illnesses and the average claim age on these types of policies is around 43 years old. The most common illnesses claimed on are for Cancer, Heart attack, Stroke, Serious Accident related illnesses and Children’s Cover. The positive news is that in this day and age if you are diagnosed with a critical illness you are likely to survive wheras ten years ago it may have killed you. The downside is that you may not return to work for a very long time due to recovery which could therefore also have a damaging impact on your income. Critical Illness policies will pay out a lump sum which you can use for any purpose you wish. Most people will use it to pay off all or part of the mortgage, some will use it to skip NHS waiting lists or to pay for treatment in America or Germany that is not available in the UK and others use it simply to replace the income they have lost.