What is Mortgage Protection and Why is It Necessary?
Many of us don’t want to stop and think about what would happen if our income suddenly stopped due to illness, injury or death. Mortgage protection helps to ensure peace of mind for those unexpected events in life. In this guide, I explain different ways to protect your mortgage, from Life Cover, Critical Illness and Income Protection to Family Income Benefit.
Mortgage Protection and Life Insurance
Life Cover pays out a lump sum if you or the policyholder dies within the specified term. It can help to support your family financially if you or your partner passed away.
Life insurance can help you pay off your mortgage, and it can act as a financial buffer for other household bills. There are different types of life policies, including whole life and term insurance. Some policies can be linked to a mortgage term, ensuring a lump sum is paid out in the event of death.
Critical Illness Insurance for Mortgages
Critical Illness Cover is a type of policy that pays out a one-off, tax-free payment if you’re diagnosed with a serious condition. This lump sum can help you manage everyday costs and mortgage repayments. It can also be used to pay for medical treatment and towards your recovery.
Critical illness insurance varies and you can only claim if you are diagnosed with a specified illness listed in the policy. Typical conditions covered include cancer, heart attack or a stroke. Before taking out this insurance, always check the conditions listed in the policy.
Income Protection Insurance
Income Protection pays out a monthly sum to help you manage financially if illness or injury has stopped you from working. It can help you manage your monthly mortgage repayments and household bills.
Income protection insurance is important for those who are self-employed and aren’t eligible for Statutory Sick Pay (SSP). This type of policy helps you to replace a large percentage of your lost income if you are unable to work. The monthly income is usually between 50 – 70% of your salary.
Family Income Benefit
Family Income Benefit also pays out a monthly, tax-free income to help you support your family if you pass away within the policy term. It’s an often-overlooked form of cover designed to replace lost income, so your family can pay the mortgage and bills.
Family protection insurance could provide your loved ones with a much-needed financial safety net if you or the policyholder died. This type of cover can work well alongside a life cover policy.
Get Mortgage Protection Insurance
Protecting your mortgage ensures you can protect your family if the worst did happen and either you or your partner fell ill or passed away.
I’m Ann Evans, and I love helping individuals, couples and families arrange suitable protection for their peace of mind. With access to a wide range of providers, I can help you review your existing policies and choose the right insurance for your needs. I will explain how the different types of policies work and I’m here to guide you every step of the way.
Do you need mortgage protection or insurance advice? Book a call today
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Sources:
https://adviser.royallondon.com/technical-central/protection-guidance/family-protection/
https://moneyfactscompare.co.uk/insurance/guides/family-income-benefits/
