Get protection cover now so you can always pay your mortgage

Monday 8 January, 2024

Make Protection Cover your New Year’s Resolution 

When our Lonsdale mortgage brokers discuss your mortgage situation, we will always recommend you review your protection cover.  If for any reason you were unable to make your mortgage repayments if you have a protection policy, it could pay your mortgage and prevent you losing your home.

Why is life insurance important?

If you are the sole earner or your partner relies on your income to pay the mortgage, consider taking out life insurance cover so your dependants can pay or clear the mortgage if you die.  

There are three different types of life cover including: level term assurance, decreasing term assurance and family income benefit.

Purchasing life insurance reassures you and your dependents that your mortgage will always be paid in the event of your death.

When is Critical Illness cover required?

By taking out critical illness cover you will have peace of mind if you are diagnosed with a disability or critical illness and survive a set number of days, typically 14-28 days from the diagnosis.  This policy can be bought with life assurance or purchased separately. Policies are flexible and cover different illnesses such as cancer, heart disease or stroke. You can organise a policy that provides cover until your mortgage is paid off or until you retire from work or for a set period.  

Setting up Income Protection pays your mortgage if you can’t work?

If you are unable to work due to injury or illness then income protection usually pays out a tax-free percentage of your salary monthly (which is normally 50%). This enables you and your family to continue paying bills and your mortgage payments. Income protection payments normally start if you have been unable to work for three or six months and generally continue until the policy ends or when you return to work.

Amy Kadir, Mortgage Adviser and protection specialist, Lonsdale Mortgages St Albans, Hertfordshire said:

‘Whenever I discuss mortgage advice with customers and produce a mortgage quote, I always ask customers if they have protection cover, as I believe it is in the best interests of everyone taking out a mortgage to consider how they would pay for their mortgage if anything unforeseen happened to them.  Before meeting your mortgage broker, it is useful to check whether you already have any current insurance policies, and what they cover so we can review them when you take out your mortgage.  if your employer offers critical illness or other protection cover some customers may already have adequate insurance cover. Or customers might want to purchase ASU cover because if you are employed but can’t work for a short time accident, sickness and unemployment insurance will cover some of your income for up to a year before you get back to work.  I recommend that customers regularly review their insurance policies as their circumstances change during their life. For example, as children grow older, or you pay off part of your mortgage you may not need as much protection cover or could renew insurance cover at a lower level. By discussing our customer’s financial and personal situation we can determine the best protection cover for you and your family.  It is not easy to discuss life assurance with our customers but as a mortgage broker I believe it is my role to offer protection advice so I will check that if a dependent died their family could still pay off their mortgage.  If this isn’t the case, I would recommend considering a life insurance policy. Read more information on Insurance & Protection Cover. If you have a mortgage but no life cover, income protection or critical illness cover we recommend you call our mortgage broking team on 01727 845500 or contact our St Albans and Lichfield mortgage brokers for specialist protection advice.'

In Summary…

If your family depend on you to pay the mortgage, we recommend you regularly check your protection cover so you are adequately insured if you become ill or can’t work.  At Lonsdale Mortgages we can discuss protection cover with you even if you haven’t taken out a mortgage through us.  Always get the right insurance cover to protect your family. 

As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.  The information contained in within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The Financial Conduct Authority do not regulate some forms of buy to let mortgages.

 

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