Insurance
It is wise to protect yourself and your family by arranging suitable insurance. Government benefits support is very low and unlikely to give you the financial security you and your family require. Imagine how your family would cope should you or your partner become too ill to work, lose your job or, at worst, a death occurs. There are several types of insurance you should consider:
- Life Insurance – If you have dependents this will allow the mortgage to be paid off in full should you die before the end of the mortgage term. If you have no dependents it may not be necessary – you may be better with income protection instead.
- Critical Illness Insurance – Will pay a lump sum sufficient to repay the mortgage should you be diagnosed with a pre-defined critical illness. Protects you if you are unable to work because of serious illness and you lose your main income, but has become very expensive and only covers the most serious conditions. A smaller amount of cover, say £20,000, is far more affordable and would offer some degree of protection, and is better than no cover at all.
- Family Income Benefit – Should you die this contract will pay out a monthly amount to your family. This will allow them to continue to meet regular expenditure, such as the mortgage, living expenses or school fees.
- Income Protection - Also known as Disability Income Benefit, a long term contract designed to pay a monthly benefit for the term of the mortgage. Will protect you if you are unable to work long-term because of serious illness or disability. Tends to be the least well insured area for most people, but generally you are more likely to suffer a long-term illness than to die.
- Unemployment Cover – Designed to pay your monthly mortgage payments should you lose your job because of redundancy. A short-term policy, it will pay out for a maximum of 12 or 24 months, sufficient time to allow you to look for another job. It is also possible to increase cover for sickness and accident. Have become very popular following the economic downturn, as job security has decreased for most people, but the cost is increasing as the risk is to the insurer also increases. Also, some insurers are now refusing to cover existing mortgages. Be very aware that the insurer will not pay out a claim if you knew you were at risk of unemployment when you took the policy out.
- Building & Contents Insurance – The former is mandatory to protect the lender. Contents insurance is highly advisable, preferably with accidental cover included.
We can advise you on the ideal level and type of cover you need depending upon your individual circumstances. Typically a combination of policies will give the level of protection you and your family require. We use the whole market to source our insurance quotes, so even if you have existing cover we can possibly reduce the cost to you by switching to a cheaper insurer. As always, we will give our recommendations in writing and you are free to make your own decisions. Contact us for further information and quotes.