Protecting Your Home, Income and Loved Ones

A mortgage is usually the biggest financial commitment we ever take on. It all hinges on your ability to earn an income. If you lose your income through illness or injury, you could be at risk of losing your home. Having policies in place to safeguard against this is sensible. Policies like income protection, which is a monthly replacement of your income, or critical illness which pays out a lump sum on diagnosis of specific critical illnesses, can help you have the financial resilience to keep paying your mortgage and bills. Life insurance will pay out a lump sum if you die. The amount of life insurance recommended is usually enough to at least pay off your mortgage and leave your property debt free to your loved ones. It’s also sensible to think about the loss of your income on the household needs over and above the mortgage. Could your family still maintain their lifestyle if you were no longer here. Buildings insurance is the only insurance that is mandatory when you take out a mortgage, but I would argue that paying your mortgage and bills is mandatory too. I can provide advice on all these types of cover.

Often yes, I will understand your health history and be able to advise which insurers may offer the most favourable approach to this. When we apply for insurance, we will complete a health history questionnaire. This allows the insurer to understand about your lifestyle and health history. They will often need to write to your GP to understand more about you have declared. They will always cover the cost of any GP reports. When the insurer has completed their underwriting, they will provide one of the following decisions. 1. Standard terms, what we applied for is what we have been offered, no change to policy, no exclusions and no change to price. 2. Rated – an increase in monthly cost as they feel you are more likely to need to use the policy in the future. 3. Exclusions – they may exclude a condition that you already have an experience of this means you couldn’t make a claim for this condition, but you could for all other conditions covered under the policy. 4. Decline cover, depending on your individual health history it may not be possible to get cover at this time. I can help review this in the future if appropriate.

I will always look to understand your employee benefits as a starting point to understand how long you may be paid for if you are unwell and not able to work. I will then show you how much income you would need monthly to meet your mortgage payment, pay your essential bills, do the food shop and have some left over for actual life. You may have savings that would support your income for a month or so, but this will be depleted much faster than it took you to save. What would you do then? Having a policy such as income protection can replace your income when you are unwell and not able to work, meaning you don’t have to deplete your savings and most importantly you can keep your home. If you change employer or your income changes significantly, I will be there to review your policy and ensure it still meets your needs.

Life insurance pays out when you die. Statistically the chances of dying within your mortgage term are low for most people. This is why life insurance is relatively cheap. Critical illness pays out on diagnosis of a pre-defined critical illness. The most common claims in the UK are cancer, stroke and heart attack. Cancer research UK predicts that 1 in 2 of us will get cancer in our lifetime. If I gave you a 1 in 2 chance of winning the lotto, you would buy a ticket. Taking out insurance long before you think you will need is the right time to take out cover. The younger you are at the point of application, the cheaper it will be. I only work with 5-star Defaqto rated insurers who offer the broadest and most comprehensive definitions of critical illnesses.

I work with L&G, LV, Royal London, Guardian, Aviva & Vitality. The reason I chose to work with these providers is based on their pay out rates and service, as well as the quality cover they offer. One of the benefits of my advice is that I will always help you understand the importance of putting your policy in trust and assist you in completing the paperwork. Putting a policy in trust means it is paid out timely and to the right person. Life insurance can be paid out in a matter of days. Some policies will even pay out before a death if the policy includes terminal illness cover. This can give clients peace of mind that their family are financial okay before the final goodbyes. Critical illness claims require evidence of your diagnosis. You will usually have a letter from your doctor already. The timescale for pay-out is usually a few weeks to a couple of months, once a valid claim has been accepted. The exact timescale depends on the insurer, the condition, and how quickly all medical evidence and paperwork can be provided. I’ll be on hand to assist with the claim process.