Mortgage Protection Services
Buildings insurance is a product and usually essential if you have a mortgage. Your lender is likely to insist you have cover in place to protect their financial interest in your property. You’ll need to insure for what’s called the ‘rebuild cost,’ which is the amount of money you would need to completely rebuild your home from scratch should disaster strike.
This isn’t the same as its market value and is usually less. That’s because the market value includes factors such as location, local amenities and supply and demand. We can help you find a suitable policy that provides the right level of cover for your needs. We’ll explain about the additional cover you can take out to cover unwelcome events like home emergencies. This can include cover for boiler breakdown, burst water pipes, or gas or electrical failures.
Home contents insurance covers all the things kept in a home such as TVs, furniture and carpets and personal belongings. You can also include additional cover such as accidental damage that will insure personal items when they are used away from home such as laptops, jewellery, phones and cameras.
When thinking about home contents insurance, you need to ask yourself how you would cope if you were to lose everything. Replacing all your possessions would be an expensive exercise, so contents insurance is vital to cover unexpected events like burglary or fire. With the average value of contents in a three-bedroom family home estimated at £55,000*, it’s important to be fully insured at all times. Most policies offer new for old cover, meaning you will get the full replacement value if they are lost, stolen or damage.
Life Cover / Life Insurance
If you need convincing that life insurance is a good product to buy, ask yourself this question. If you were to die, how much money would your family have to live on? Many families would find themselves running short of money very quickly.
Your salary would stop, but the household bills and mortgage repayments would still need to be paid. A payout from a policy could make the difference between your loved ones facing a financial struggle at a challenging and emotional period in their lives, and being able to maintain the sort of lifestyle they enjoyed when you were still around. Most people tailor their policy to ensure that their financial commitments would be met in the event of their death, so policies are often aligned with the term of a mortgage or other loan.
Life insurance isn’t the only form of protection policy you can take out. Here are some other policy types that families with mortgages often consider.
Income Protection Insurance
This type of policy pays a monthly income tax-free if you are unable to work due to an illness or injury. The monthly income under the policy will be between 50 and 70 per cent of your salary and will be paid until you are fit enough to return to work, or reach retirement age.
State benefits often aren’t very generous in this area and only a few employers will continue to support their staff through a long term illness, so income protection policies can help families through difficult financial times. You can choose the date at which the policy would pay out in the event of a claim. This can range from a month to up to a year. Policies that pay out sooner will have higher premiums.
Critical Illness Cover
Critical illness cover pays out a tax-free lump sum if you are diagnosed with a major illness as specified in the policy, for example cancer and heart disease. Some insurers will make a part payment on an early-stage diagnosis of a condition specified in the policy, the percentage will vary from company to company.
Many people buy a combined life and critical illness policy, and it often makes sense to do so. In this case, a payment would be made on either diagnosis of a critical illness, or death, whichever is the sooner. If the cover is combined in this way, the policy premium is usually cheaper than it would be for separate policies, as there is only ever one lump sum paid out by the insurance company.
Family Income Benefit
These policies can offer affordable cover for growing families. Family income benefit policies work in a similar way to ordinary life cover, but instead of a lump sum the policy pays out a regular income if the policyholder dies. Parents of young children often consider this type of policy, and take it out jointly, as it means that if one of them were to die during the term of the policy, then an income would be paid out for a pre-determined period.
So, for example, if you had a 20-year policy and were to die five years into it, then the policy would pay out a regular income for the remaining 15 years. This type of policy can also be combined with critical illness cover.