Get The Most Suitable Mortgage Protection for Your Needs to Protect Yourself and Your Family!
Mortgage life insurance pays out tax free a lump sum so that the outstanding mortgage balance on your home can be repaid to the mortgage lender in the event of death of the life assured. Mortgage Life Insurance is optional but if you do then it will give you and your family the peace of mind that the mortgage is paid off should you or a key family member die before the end of your mortgage term which can have a significant impact on the financial burden of the person left behind.
In addition to paying off the mortgage you may want to ensure that your family receive income after your death which this type of policy can also offer.
Decreasing Term Insurance
A decreasing term issurance policy is usually taken out to cover a repayment mortgage or other type of debt whereby the amount of debt reduces over the term of the loan or mortgage.
This is the least expensive type of insurance as the amount of potential payout reduces over time whilst payments remain the same. Unless there is a claim before the end of the term the insurance will simply expire. There is no investment element to these types of policy as the overall objective of mortgage life cover is to pay off the remaining mortgage amount should death occur.
Level Term Insurance
A level term insurance policy pays out a tax free lump sum in the event of death of the life insured for a specific term which is usually the term of the mortgage. The amount you are covered for remains the same throughout the term of the policy. This type of life insurance policy is most suitable where the mortgage debt does not reduce throughout the term of the mortgage.
This could be when the repayment vehicle is an investment policy such as an endowment policy which intends to pay off the mortgage at the end of the term.
Whole of Life
Another option is to take out a life assurance policy called a whole of life policy. This type of policy will pay out whenever you or the life assured dies. Premiums are more expensive than term insurance as the premiums are investment linked.
Family Income Benefit
If you think that your family will be unable to manage on the income they have in the event of your death then Family Income Benefit is worth considering. Family Income Benefit is a term insurance which only pays out an income rather than a lump sum.
Critical Illness InsuranceCritical illness Cover is an insurance policy which is designed to pay out a lump sum in the event that the policy holder suffers a critical illness and survives for at least 28 days after diagnosis.
The lump sum can be spent on anything but paying off your mortgage or improving lifestyle are the main objective as you may not be able to work after suffering a critical illness. It is designed to give people with mortgages some protection in the event that the policyholder cannot work.
Critical Illness policies cover the seven core illnesses but often providers will include more critical illnesses in the policy, but this varies depending on provider.
Seven Core Illnesses:
- Heart Attack
- Kidney Failure
- Coronary artery bypass
- Major Organ Transplant
- Multiple Sclerosis
There are over 200 variations of critical illness policies available so it makes sense to speak to one of our Independent Financial Advisers (IFA). A critical illness policy is usually linked to a term life insurance policy.
Protecting Your Mortgage
Mortgage Payment Protection Insurance (MPPI) covers the cost of your mortgage for a maximum of 12 months should you be unable to work in the event of an accident, sickness or unemployment.
One of our experienced Independent Financial Advisers (IFA) can advise and guide on all of the benefits that this type of insurance has to offer. You will also need to find out how much your employer will pay you in the event of unemployment such as redundancy. If you have worked for your employer for a long period of time and the benefit is high then there may not be a need to have the unemployment element of this insurance which would also help to keep the premiums down.
Although many policies backdate to day one of the claim most providers will not start paying until day 31 or 60 days. Payments can also be capped between £1500 – £2000 per month or as a percentage of your salary. For unemployment cover payments from the insurance company are not usually made until the first 3 to 6 months which means you must rely on savings to keep your mortgage paid.
If you receive any payments from your MPPI policy it may affect the amount of state benefit that you will receive. This type of policy looks very similar to Income protection which is often known as “Accident, Sickness & Unemployment” cover but that is where the similarity ends. Our IFA (independent Financial Adviser) will advise which policy is best for you and what the main differences are between the two types.
Protecting Your Income
If you are unable to work due to sickness or disability then income protection insurance will help you pay the bills on a monthly basis up to a certain percentage of your annual income. Once your application has been accepted the policy cannot be cancelled by the insurer which means you have no concerns about the policy being withdrawn if you have health problems in the future. There is no limit with regard to the amount of claims you can make on your policy or the length of the claim period.
An Income Protection Insurance Policy can cover you up to retirement age and the premiums can be lowered if you defer the payout date if you make a claim.
If you are already receiving sick pay from your employer you cannot claim the full amount but you may be entitled to a smaller payout to top up what you already get. The policy is flexible enough to pay out a reduced amount even if you return to work on a part time basis following a claim.
If you are thinking of a less expensive short term option then Accident, Sickness & Unemployment cover (ASU) may be an option. This type of policy is renewed annually and will pay out for a maximum of 12 to 24 months after receiving your first payment. Although backdated to day 1, you can defer payments to 30, 60 or 90 days to make the policy less expensive.
You can claim just once on these policies and the insurer can cancel the insurance when renewal of the policy occurs annually.
Our Independent Financial Adviser will assess your needs and advise which is the best policy for you.
Protecting Your Home
Home Insurance is a term for describing two different types of general insurance:
- Buildings Insurance
- Contents Insurance
- Building Insurance
If you own your home then you may want to seriously consider having buildings insurance. Buildings Insurance covers the fabric of the house such as the walls (including windows and doors), floors and roof as well as permanent fixtures such as a kitchen or bathroom.
Here are some of the examples that this type of insurance covers you for:
- Leaking pipes
This insurance covers you against loss or damage to your personal possessions which are inside your home and if included your garage and outhouses. Some insurance policies will give cover for items you take outside of the home such as laptops and mobile phones.
These are the main types of cover available:
- New for old – This is where the insurer will replace everything that was lost for brand new items.
- Indemnity cover – This will pay out the value of what was lost which is not necessarily the cost of replacing the item new. This can be a false economy even though the premium maybe less expensive.
Some policies include accidental damage, legal advice and cover, personal possessions and home emergency cover as an additional extra.
If you are looking for a high quality home insurance from a reputable insurer who has a high “pay out” claims percentage then speak to us today to discuss
Joint Life Cover
Joint life insurance policies are needed when couples want to provide for each other in the event of death. There is nothing to stop you having two separate life insurance policies but joint life cover is less expensive than two separate policies because a joint life policy would pay out just once in the event of death.
Joint Life “First Death”
The most common type of joint life insurance is a first death policy whereby the policy expires after the insurance company settles the claim after one of the policy holder dies. If both of the insured dies at the same time then the policy will still only pay out once.
Another combination is joint life “second death” which is also known as a survivor policy. This means that the life insurance policy will only pay out when the second person on the policy dies. The main advantage is that the premiums are less expensive as the life expectancy is extended.
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