Protect your mortgage…

Why should you protect your mortgage?

Your mortgage is probably the biggest financial commitment that you will ever make!

Buying a property is relatively easy, keeping it though, can sometimes prove to be difficult. A typical mortgage term is 25 years and at some point during this time you are likely to get sick, have an accident, be made redundant or even worse die. If that were to happen who’s going to pay the mortgage?

You need to be prepared and we are here to help you do so, it’s our job to make sure you are covered when you need to be.

Life Assurance

If you have a family, life assurance can give you peace of mind that they will be looked after in the tragic event of your death. None of us like to think about it, but understanding how this type of insurance works could save you money. There are a varying versions of life assurance. With a level term policy the benefit is paid on death and remains the same throughout the term. At the end of the term the policy has no value and simply expires. It is often bought to cover the repayment of liabilities such as a loan or a mortgage – particularly interest-only mortgages which do not reduce over the years. With decreasing term policies, the benefit payable on death falls each year until it is zero by the end of the policy’s term. Such insurance is often used in tandem with the purchase of a repayment mortgage whose capital value falls over the mortgage term. The premiums on these policies are cheaper than for level term insurance.

Critical Illness

A serious illness, such as cancer or heart attack, affects one-in-four women and one-in-five men before retirement age. Critical illness insurance is designed to ease the financial pressures by paying a tax-free lump sum if you become seriously ill or totally disabled. Critical illness insurance pays benefits on the diagnosis of certain specified critical illnesses. The range of diseases covered has increased to more than 30, though contracts differ from one company to another. All policies should cover seven core conditions. These are cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke. They will also pay out if a policyholder becomes permanently disabled as a result of injury or illness.

Home Insurance

Home owners need two types of home insurance to enjoy peace of mind. Buildings cover (which is a condition of any mortgage) pays for damage to your home caused by, for example, fire or subsidence. Contents cover protects your household possessions. These two types of cover may be bought separately but it is often more convenient and cost-effective to buy them under one policy. Choosing the best deal from the wide range on offer can be a nightmare. Many companies now offer all-singing, all-dancing policies but beware – the number of conditions, caveats and exclusions has also expanded. We’ll help you pick your way through the insurance jungle with the greatest of caution.

Be aware that if you move house you may need to change both policies because the risk has changed.

We have a single tie for buildings and contents insurance with L&G.

Mortgage Payment Protection Insurance

Many people never consider mortgage payment protection insurance (MPPI) when taking out their home loan. But the Government has forced a shake-up in the market and policies must now meet or exceed certain minimum standards. You may think that you will be able to rely on your savings or State benefits to pay the mortgage if you are unable to work – but research has revealed that for the majority of borrowers both these routes would be inadequate to cover them. Did you know that we can get you £500 per month benefit for as little as £25 per month??

MPPI is not compulsory but anyone with a mortgage should consider taking it out. For people who might have stretched themselves financially with their mortgage it is probably even more important to be covered in the event of unforeseen unemployment. Good policies will cover any bills related to your mortgage – including interest and repayments.

The State benefits for people in this situation are limited and they are means tested, so if you have savings you would be expected to use them first. Also, expect to wait around nine months before you see any payout. A good MPPI policy will start to pay one month after you are out of work (either through illness or redundancy). Typically policies pay out for 12-24 months. It is expected that within that period people will have found other employment or recovered from illness. However, some illnesses can go on for far longer than 12 or 24 months and for protection here you will need…

There are other providers of Payment Protection Insurance [Short-Term Income Protection] and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk

Income Protection

Long-term illness is something we prefer not to think about but official figures show that every year more than 670,000 men aged between 40 and 64 are absent from work for more than six months because of it. Many suffer financial hardship as a result and the state offers only minimal help. Eligibility for incapacity benefit is strict. After 28 weeks of illness claimants must undergo a test checking their ability to carry out a range of work-related activities such as walking, sitting and using stairs. Even if they qualify, benefits are not generous and they are taxable.

Income Protection is the answer. It pays a regular income designed to protect your standard of living if you suffer long-term sickness or injury. Benefit usually starts after an initial waiting period of four, 13, 26 or 52 weeks and it is payable until you return to work, die or the policy term expires, whichever happens first.

Call us – we’re here to help YOU!

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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