Protecting your greatest asset – you?
A mortgage will most likely be the greatest financial commitment most people make. Your home (or buy-to-let investment) relies on your income to repay the loans. Imagine the financial consequences caused by events that could stop you earning enough money to repay your mortgage. Some examples are:
– Short or long-term illness
– Serious illness – like cancer, a stroke or a heart attack.
– Death (yours or a partner)
– Any of the above happening to a tenant in your buy-to-let.
How long will your current provisions last?
When considering plans you have in place, are they sufficient and how long will they last? The first step we take is to check what protection you have already and how that contributes to the solution. Should you need to build on your existing plans we will always consider your overall objectives and budget.
Is protection only about your mortgage?
Definitely not. To fully protect yourselves, requires a more in-depth review of your overall situation.The first aim of protection is to help you keep your home (or property). The second aim is to maintain your, and your family’s, standard of living should something terrible happen. There are events we can all face that have the potential to wreck lives and families. It’s a difficult issue to think about, but imagine the impact on you and your family should the main earner in your household die or become seriously ill. It may not happen to you – we hope it doesn’t – but it might.
What is life insurance?
Life coverage is a cost effective insurance policy used by many to protect their family home in the event of their death, during the term of the policy. The specified amount of life cover is typically determined by the amount outstanding on your mortgage. The amount of cover can be set over and above this figure, taking into account additional living costs. The term of the policy typically runs in line with your mortgage. Depending on the type of mortgage, determines if the policy is setup on a level, decreasing or indexed basis. The policy holder is required to make monthly payments, in return for a predetermined amount of coverage. In the event of a claim, the specified amount is used to repay your mortgage balance.
What is critical illness cover?
It is prudent to take appropriate steps to ensure you are adequately protected against the financial consequences caused by critical illnesses and serious illnesses. The difference between critical illness coverage and basic life coverage being the specified tax free lump sum is paid when you are diagnosed with one of many specified critical illnesses, during the term of the policy. Critical illness insurance provides overwhelming financial protection for policy holders whilst recovering from a critical illness. In the event of a claim, the specified amount of coverage is used to repay your mortgage. If the specified amount of cover is adequate, it would provide additional cash benefits to help towards living costs and associated care costs. There are additional options available under the critical illness option for additional monthly premiums. Your financial advisor can discuss those options with you, during your financial review.
Interested in statistics on critical illnesses?
1.3 million people in the UK today, have survived a stroke. One person every five minutes will suffer a stroke or transient ischaemic attack (TIA). In the UK today, one person every three minutes will suffer a heart attack. There are one million people alive in the UK who have survived a heart attack. These figures are without considering statistics related to other critical illness such as cancer and the many other. (Statistics are from the British Heart Foundation in November 2018).
What is terminal illness cover?
Terminal illness cover provides a specified lump sum, if the insured person is diagnosed terminally ill. Terminal illness coverage is an early life cover payout. Most commonly during the last 12 months of the insured’s life. Terminal illness cover is not the same as critical illness cover or serious illness cover. The key difference being, recovery is not possible.
What is income protection?
Income protection provides a specified amount of income in the event the insured is unable to work due to an accident or sickness. It would be prudent for you to consider an income protection policy to cover basic living expenses, such as your mortgage payments and household bills.
Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against the loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk.