With many years of experience Ideal Home Loans are well placed to suggest and provide the most suitable solutions to protect your mortgage and financial commitments.
Mortgage Protection – Ideal Home Loans have got you covered
In this episode of the Mortgage and Protection podcast, Martyn from Ideal Home Loans explores the all-important subject of mortgage protection.
What is mortgage protection?
Mortgage protection is a general term that describes various insurance products you might consider once you have a mortgage to worry about – so life insurance, income protection, critical illness cover for example.
Why is it important to have life insurance?
If you’ve got a mortgage, it’s a good idea to have some type of life insurance in place to repay the mortgage if you were to die before the term has finished. That way your loved ones can stay in the house.
Take time to consider how much your family might need to cover other things too – and indeed replace your income. If you’re the main breadwinner and your income stopped, how would they manage?
What if I have pre-existing medical conditions?
If you have a pre-existing condition, it doesn’t necessarily affect your ability to obtain life insurance. Insurers might charge you a higher premium or exclude certain things. If you’ve got a major condition, they might insure you for everything else, but not that condition.
Do I need critical illness cover?
Critical illness insurance is a long term policy that covers a list of illnesses – each insurance company has a slightly different definition of these. Put simply, if you get one of those illnesses, the policy will pay you a tax-free one-off payment, which you could use to repay your mortgage.
You could also use it to adapt your property, for example, if you’re wheelchair bound or have special access needs.
I can personally relate to the need for this cover, as I suffered a stroke back in August 2019 and the last thing I needed lying in hospital was the worry about what’s happening financially. It took me three months before I could drive again, and six months to fully recover. So it’s nice to know that your lifestyle is not affected and your bills are paid.
What is income protection?
Again, income protection covers most illnesses and injuries that stop you from working. They replace part of your income during the time you’re unable to work. It ends when you return to work, you retire, the policy ends or you reach a claim limit.
It doesn’t payout if you’re made redundant, there are other policies for that.
What is family income benefit?
Life insurance and critical illness insurance payout a lump sum, while family income benefit pays out a regular tax-free income for a set time if you were to pass away. When you buy a family income benefit policy, you choose how long you’d like the cover to be in place.
You might want it to last until your children leave home, for example, or when you reach retirement.
I have insurance but I’m not sure if it’s right for me. What do I do?
This is really common. Many clients email us their existing policy documents so we can explain what they’re currently covered for and how much cover is in place.
People are often shocked – they know how much they’re paying each month, but not what they might get in return. If you want different cover or you feel you’re paying too much, we can help you find a more suitable policy.
How much should I spend on mortgage protection?
Of course, the more cover you want, the more it will cost. And as we age, policies become more expensive. There isn’t a set amount to spend – it’s more about deciding how much you can comfortably afford to spend on protection, and then seeking expert advice to get the most thorough cover for your money. It’s also important to review it every few years to check the cover is still enough.