All you need to know about the most common types of insurance & how they could help you
Life insurance is a monthly payment in exchange for protecting your life against a defined amount of money. It is a lump sum payment that is paid on death.
The primary use of life insurance is so that SOMEBODY ELSE can receive a significant sum of money if anything was to happen to you. You’re protecting your life, for the benefit of someone else. This is usually done to protect your partner, or another family member/other individual who would be adversely affected if you were no longer around.
For example: If you have a mortgage with your partner based on both of your incomes, most people would cover themselves for life insurance so that if anything happened to you, your significant other would not suffer financially & could continue to pay the mortgage & keep their lifestyle.
It’s also extremely useful for people who have children who they would like to leave a legacy to, to help them through life if anything happened to you.
Life insurance is less useful for people who are buying a property on their own & who have no financial dependents who rely on them. This type of customer would only usually consider life insurance for any Terminal Illness benefits as the insurer may pay out early if you are diagnosed with a condition defined as ‘terminal’, or if they wanted a family member such as a brother or sister to benefit financially if they were to pass, as a nice gesture.
Critical Illness cover is a monthly payment in exchange for covering yourself for a specified amount in the event of being diagnosed by a defined list of critical illnesses. There are varying levels of cover, with some providers & policies covering significantly more critical illness conditions than others.
Advice on critical illness cover is very important to make sure you’re getting the most appropriate policy for you, because every provider offers very different cover & varying benefits. We need to establish your needs to make sure we can recommend a suitable policy for you.
Unlike life insurance, YOU are likely to be the main person to benefit from a policy like this, as the money would be paid directly to you.
Your children can be covered as an optional add on to your critical illness cover which, if selected, would then give cover to your children for a specified list of illnesses, which is a huge benefit for a lot of parents.
Critical Illnesses include things like: heart attacks, strokes, cancers & Multiple Sclerosis amongst many more.
The most comprehensive option is to cover yourself for the full amount of the mortgage, so that if anything happens to you, then you can afford to pay the mortgage off in full & eliminate your largest financial burden, which can make a difficult situation & lot easier to handle, knowing you have a roof over your head. This is advisable if you have the means to do so in a lot of cases.
If budget is a concern, then there are other avenues to discuss such as covering yourself for a multiple of your salary, for example. We can create bespoke solutions for you after we’ve discussed your needs & overall circumstances.
Income protection, unlike critical illness or most types of life insurance, pays out a MONTHLY benefit to you to replace your income in the event you can’t work due to accident, illness, injury or mental health issues such as stress/depression etc. This cover is designed to allow you to service your monthly expenditure while off work & continue to contribute to your household.
If you’re buying a house alone, without your income, how would you afford to pay the mortgage & your other expenditure each month?
If you’re buying with someone else, without your income, could your household still afford to meet your overall expenditure? If the answer is no, or if your lifestyle would be significantly negatively impacted; income protection should be a serious consideration.
Income protection is ideal for those with poor workplace sick pay, or those who have no workplace benefits due to their nature of their employment, for example self-employed individuals.
For this type of cover, you pick the ‘deferred period’ which means you can have it pay out after 1 month of being off work, 3 months, or 6 months etc. The longer the deferred period, the cheaper the cover will be. You can also select how long the policy will pay out for per claim. You can choose a 1, 2, or 5 year limited payout period, or you can elect for a full term payout period, which means your policy would pay out until the insurance term expires.
A lot of people get full sick pay at work for a period of time, so for example if you got 3 months full sick pay benefit at work, you may elect to have a 3 month deferred period on your income protection policy, so your income is always covered.
Sick pay benefits DO NOT eliminate the need for income protection, they simply help you define the right amount of time after your absence from work occurs where you’ll need the payout.
If you don’t have a mortgage it’s still very common to take insurance. There’s a lot of reasons for this, but here’s just a few:
If you’re mortgage free, don’t hesitate to contact us to see how we can help.
Whether your a mortgage customer or someone looking for a standalone insurance policy, we’re here to help & support you through the process.
Plura is a trading name of Plura Mortgage Advice Ltd which is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority. Registered Office 25-29 Sandy Way. Yeadon, Leeds, LS19 7EW. Registered in England & Wales with company number 14931418. We charge a fee for Mortgage Advice, usually £395, but this can vary depending on the service you are receiving. We’re also paid commission from the lender
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK
