Mortgage Payment Protection Insurance

For the majority of homeowners, their mortgage is their biggest monthly outgoing. So, if losing your job or not being able to work due to an illness or accident means you’ll struggle to pay it each month, it’s sensible to protect yourself. If you live by yourself and don’t have savings to fall back on it may be particularly important. Similarly, if you live with a partner who does work but you can’t manage on their income alone, it may be a good option.

There are varying levels of mortgage payment protection insurance you can take out depending on what you want to be covered for. These are ‘unemployment only’, ‘accident and sickness only’, and ‘accident, sickness and unemployment.’ The level of cover you take will help determine the cost of the premiums. So, consider which would suit your circumstances best.

But, you need to bear in mind that due to the pandemic, some insurers have added Covid-related exemptions to their policies, so make sure that you check before you take out any protection. Many providers have also begun to cover people who are self-employed. However, it’s always important to make sure you check the small print carefully to make sure you’re not exempt.

The question to ask yourself is, could you cope? If you lost your wage, would you still be able to pay the mortgage repayments, the household bills or any other expenses you currently have? If the answer is no, then you might want to consider taking out an income protection policy.

Income protection is something you should consider having in place if you wouldn’t be able to meet your financial commitments if you were unable to work.

Some people don’t think they need it because they have sick pay through their employer. Although this might be correct, it’s worth reading your employee contract closely to see exactly what sick pay you’re entitled to, as it might be less than you think. It may cover you for short-term sickness, but what if you were off for six months or more?

Income protection insurance usually covers a wide range of illnesses and situations and has the potential to pay out for many years, offering a great deal of peace of mind.

The cost of a policy will vary based on your individual circumstances and takes into consideration things such as your age, employment and health.

There are many providers offering critical illness cover, and the right policy for you will depend on your needs and current circumstances. Of course, when looking for any protection policy, it’s always worthwhile shopping around and doing your research to ensure you get the best possible deal, as well as the right level of cover.

Illnesses covered vary widely depending on your critical illness policy provider, but a number of core conditions are traditionally covered by all:

• Cancer
• Heart attack
• Kidney failure
• Coronary artery bypass
• Stroke
• Multiple sclerosis
• Major organ transport
• Loss of arms or legs and major disabilities
• Diseases such as multiple sclerosis or Parkinson’s disease

All policies cover numerous life-changing illnesses and conditions but make sure you check your policy as not every type of illness is covered.

Critical illness policies usually carry a number of specific conditions that would render a claim invalid, so always check the exclusions to ensure you’re adequately covered. These exclusions could include pre-existing medical conditions, minor heart attacks or early cancer diagnoses.

In contrast to income protection insurance that provides you with a regular payout to replace your lost income, critical illness cover gives you a lump sum, tax-free payment that you can use to pay your mortgage, your living expenses and, if required, your treatment.

WHAT IS BUILDING AND CONTENTS INSURANCE?

If you own your own home, whether it’s a two-bedroom flat or a four-bed detached property, you’ll need to have building and contents insurance in place to ensure you would pay for any necessary repairs, should your home suffer any damage.

Depending on your lender and your circumstances, building insurance is usually a condition of your mortgage. If you own your own home, it makes sense to have this type of insurance in place and without it, you could be putting your mortgage and your home at risk.

What are my options?

Buildings insurance covers damage to your home’s structure, such as the walls, roofing, floors, and often fixtures and fittings too. For instance, if you have a fitted kitchen or bathroom, your insurance is likely to pay for any repairs you need.

Contents insurance is for things like furniture, TVs, personal belongings and some types of flooring, including carpets. A simple way of putting it; if you turned your house upside down, contents insurance will cover you against the belongings that fall out of it. Different policies provide different levels of cover but usually you’ll be covered against theft, fire and flood.

Accidental damage cover also insures your belongings against any accidental damage. It’s worth keeping in mind that accidental damage cover is usually optional so don’t assume it’s included in your policy.

You can buy both buildings and contents insurance separately or as a joint policy.

How much cover do I need?

How much cover you need to have in place will depend on the value of your property and your personal possessions.

Think about what you might need to replace in the event of a robbery or a fire, and how much it would cost to replace these. This will help you work out how much cover you might need to take out.

Check what your individual insurer and policy cover is, as policies vary from one insurer to another in exactly what events you’re covered for, and for how much. Check that you’re happy with everything that the policy covers, as there can often be exclusions.

If you’d like to know more about buildings and contents insurance, please talk to our team of independent insurance protection advisers who have access to a great range of insurance products to suit your circumstances. Feel free to get in touch with one of our expert advisers.

With mortgage and protection advisers in Winchester, Southampton, Farnham, Bishops Waltham, Alton, Chandlers Ford, Alresford, Romsey and Park Gate, you are never too far from insurance advice

Income protection insurance, also known as permanent health insurance (PHI), is a type of insurance policy designed to protect individuals against the loss of income due to illness, injury, or disability. It provides a regular income replacement if the policyholder becomes unable to work and earn an income.

Here are some key features of income protection insurance:

1. Income replacement: If you are unable to work due to illness or disability, income protection insurance pays out a regular tax-free income to replace a portion of your lost earnings. Typically, this is a percentage of your pre-disability income, such as 50% to 70%.
2. Waiting period: There is usually a waiting period, known as the deferred period before the benefit payments commence. It can range from a few weeks to several months, and you can choose the length of the waiting period when you take out the policy. The longer the waiting period, the lower the premium.
3. Benefits duration: Income protection insurance policies can provide benefits for a specified period or until a certain age, such as retirement. The benefit duration can vary from a few years to up until the age of 65 or 70.
4. Eligibility and premiums: To be eligible for income protection insurance, you typically need to be between certain ages, usually 18 and 65, and be actively working. The premium you pay depends on various factors, including your age, occupation, health, and the level of coverage you choose.
5. Types of coverage: There are different types of income protection policies available, such as own-occupation cover and any-occupation cover. Own-occupation cover pays out if you’re unable to work in your specific occupation, while any-occupation cover pays out if you can’t work in any suitable occupation based on your skills and qualifications.
6. Policy exclusions: Income protection insurance policies usually have exclusions for pre-existing medical conditions or disabilities. It’s essential to review the terms and conditions of the policy to understand what is covered and what is excluded.

Income protection insurance can provide financial security during periods of extended illness, injury, or disability, ensuring that you can meet your financial obligations and maintain your standard of living.

It’s advisable to consult with insurance providers or financial advisors to understand the specific terms, conditions, and coverage options available to you based on your individual circumstances.

There are many reasons why taking out a life insurance policy makes sound financial sense, not least because of the peace of mind you’ll have if the worst was to happen. If you take the right steps to protect your loved ones and your assets now, you’ll save your family and people who might be affected by your death or illness considerable stress.

If you’re not sure why taking out a life insurance policy is for you, here are the top four reasons why you should be thinking about doing just that.

1. You have children

If you have children, whether they’re still at school or college or have flown the nest, they’ll have their own set of financial needs that you’ll want to plan for if the worst was to happen to you. A life insurance policy will give you peace of mind that your family’s financial future is protected, whether that means covering the essentials after the loss of your income, paying for their education or providing a monetary gift to use as they like.

2. You want to cover the cost of your funeral

Nobody wants to think about how they’ll pay for their own funeral, but if not now, when? The cost of a funeral has become more and more expensive – according to a 2022 SunLife report, the average cost of dying is £8,864, with a basic funeral costing £4,056. If you take out a life insurance policy, you can use it to cover the cost of your funeral and remove the financial burden from your family during what’s likely to be a distressing time.

3. You have a mortgage on your home

If you have an outstanding mortgage on your home, how will you cover the outstanding repayments if you become seriously ill and can’t work or pass away? If you have a partner, will their income be enough to cover them? A life insurance policy and critical illness protection will pay out a lump sum and enable you or your dependants to pay off your mortgage balance if things take a big turn for the worse.

4. You want to cover your inheritance tax burden

Depending on the value of your assets when you die, Inheritance Tax (IHT) is the tax your family will have to pay. If your assets amount to more than £325,000, your estate will be liable for the standard IHT rate, which in 2022/23 is 40%.

You can take steps to reduce your loved ones’ IHT liability by, for example, leaving everything over the £325,000 threshold to your spouse, civil partner or charity.

However, if you take out a life insurance policy, you can cover your IHT bill with a lump sum payment and save your family the stress of having to find a way to fund it.