Protection

Many people will insure their homes, cars or even mobile phones but what about providing financial security to those who mean the most? The pandemic crisis has no doubt highlighted the importance of having a protection plan in place for you and your family.

What is Life Insurance?

Life Insurance is designed to provide financial support to loved ones if the unexpected happens. The death of a partner or a parent has an emotional impact, but it can also lead to financial hardship too. Most Insurance policies offer to pay out a cash sum to your loved ones to help them deal with the everyday money worries such as household bills or childcare costs.

What types of life insurance are there in the market?

There are two main types of life insurance:

• term life insurance policies - run for the 'term' of your policy e.g. 5, 10 or 15 years and will only payout if you die during the policy. There is no lump sum payable at the end of this policy term.
• a whole-of-life policy - will pay out a lump sum no matter when you die, providing you keep up with the premium payments.

Is critical illness covered in Insurance policies?

Life Insurance usually only covers the event of death. However, there are some life insurance policies that provide a terminal illness benefit, although these are not automatically granted. Critical Illness, or Severe Illness cover, is a policy which includes a benefit designed to pay a lump sum if you are diagnosed with a specific illness or condition. It can be combined with life insurance or be a set up as a separate policy. It can help pay for private treatment, pay your bills, pay off some or all of your mortgage, pay off debts or even fund a holiday after recovery. Cover for children is also available.

Do you need Life Insurance?

If you have:

• dependants e.g. school-age children
• a partner who relies on your income
• a family living in a home with a mortgage that you pay - an insurance policy can take these financial pressures off your family in the event that you die.

Life cover can also be useful to cover your funeral expenses, but if you're looking specifically for funeral planning a specific plan might be better suited.

To arrange life cover for you and your family today contact us here.

What is mortgage protection?

Mortgage Protection Insurance is designed to cover the cost of your remaining mortgage balance if the unexpected happens. Mortgage protection is usually a decreasing term policy because the amount of cover reduces in line with the balance of your mortgage as you make monthly payments.

In the event of the death of a policyholder, a cash lump sum is paid out equivalent to the mortgage balance to ensure your loved ones can live mortgage-free. Generally, payments are slightly cheaper than level term cover to reflect the reduced risk.

How much does mortgage payment protection insurance cost?

Your mortgage payment protection insurance premiums will depend on a number of factors, including:

• salary
• the type of policy you take out
• the size of your mortgage repayments
• how quickly you want your policy to become active (which will likely depend on whether you receive sick pay and for how long)

How much will my policy pay out?

You can choose how much you want your policy to pay out every month - you may decide to build in a buffer over and above your mortgage repayments to cover bills and other expenses. However, providers usually set monthly upper limits of between £1,500 and £2,000.

Why might I need mortgage insurance?

Mortgage repayments are one of the largest bills people face, taking around 18% of combined household income each month, or 24% if you live in London. With that in mind, it's important to think about how you'd continue to pay your mortgage if you or your partner lost your source of income.

If it would be difficult, or if you're self-employed and therefore not eligible for sickness or redundancy pay, then mortgage protection insurance, also called mortgage payment protection insurance, might be for you.

Get a quote

If you're looking to get a quote on your Mortgage Protection policy don't hesitate to get in touch with one of our expert advisers today.