Insurance Advice

Our Specialist Advisors also provide Fee Free Insurance Advice on Life Insurance, Critical Illness Cover, Income Protection and Home Insurance. Our Advisors will use a wide panel for each and will provide you with comprehensive advice, on the most competitively priced policies.

Taking out a Mortgage is the biggest financial commitment you are ever likely to have. But when it comes to protecting our income and ourselves, to enable us to repay our Mortgage, it’s something that often gets pushed to the back of the list.

It’ll never happen to me…

But the chances are it could. According to LV=, a 32 year old Male non-smoker and a 30 year old Female non-smoker, have the following chances of needing to claim on a Protection Policy over a 25 year Mortgage term:

  • A 42% chance of being unable to work for 2 or more months – cover: Income Protection
  • A 13% chance of suffering a Serious Illness or death – cover: Life & Critical Illness Cover
  • A 4% chance of death – cover: Life Insurance
  • Or a 46% chance of being unable to work for 2 or more months, suffering a Serious Illness or death – cover: Life insurance, Critical Illness Cover and Income Protection

I can’t afford it…

Consider this, could you afford to repay your Mortgage if you went from two incomes to one. Joint Life Cover of £250,000 to protect a repayment Mortgage on the above customers, would cost around £15 per month. That’s less than a lot of Mobile Phone Insurance Policies.

And when it comes to Income Protection, if you were to break a leg or be debilitated by stress. How long will your Employer provide you with full Sick Pay? If the answer is less than 2 months, you should strongly consider taking out this policy. Think of it like this, if your employer offered you a salary of £30,000 with no sick pay, or a salary of £29,600 with up to 2 years sick pay, which would you choose? If the answer is £30,000…could you really afford to pay your Mortgage with no income coming in for 2 months or more, like the 42% above.

Specialist Providers if declined by others

Like Mortgages, there are Specialists Insurance Providers and Advisors, which can deal with your case if you have been declined by other traditional Insurance Companies. There are many reasons that you could be declined. 

These could be based on Lifestyle, for example if you have a high Body Mass Index (BMI). Or could be based on your health, for example if you have had a Critical Illness in the past such as Cancer. Insurance Providers, deem cases like these to be higher risk, so may increase the base premium you have been quoted, or decline it altogether. 

However, each provider will have different criteria on what circumstances they will consider and what they won’t. And some will Specialise in just offering Insurance Policies to people who have been declined by others.

You should always speak to a Specialist Advisor, when your case is a bit different or you have been declined by other Insurers.

Life Insurance & Critical Illness Cover

Life insurance & Critical Illness Cover are two very different policies, but they usually come hand in hand.

Life Insurance

When compared to other Protection Policies, Life Insurance is relatively cheap. Fortunately, the odds are it’s the policy you are least likely to claim on.

Life insurance is best for couples, those who have dependents or just someone they would like to leave their property too. Mortgage debt doesn’t die with you, so if you don’t have insurance in place to cover you, it will be down to your partner or relatives to sell your home to repay the Mortgage.

Most popular types of Life & Critical Illness Cover

  • Decreasing – the amount you are covered for will decrease at a set rate. This is designed to repay a capital & interest repayment mortgage. Most Residential Mortgages will be taken out on this basis. The benefit of this is because the amount you are covered for reduces, it’s generally a cheaper alternative to the above.
  • Level – the amount you are covered for will not change. Could be used for protecting an Interest only Mortgage or if you just want to have a set amount of protection in place. For example, 2 years worth of your salary.
  • Family Income Benefit – instead of paying a one-off lump sum like most other Life & Critical Illness policies. This will pay a defined annual amount upon a valid claim, spread over monthly payments, for the remainder of the policy’s term. The annual cover is usually for the same amount as the insured person’s annual salary.
  • Increasing – you guessed it, the amount you are covered for will increase. Usually at the rate of inflation, but you can also have the cover increase by a set percentage rate. 
  • Whole of Life Insurance – unlike the above, which provide you with cover for a defined period of time. This provides you with cover for the whole of your life, meaning you will receive the benefit payment at some point.

Most common claims on Critical Illness Policies

According to LV=, a 32 year old non-smoking male and a 30 year old non-smoking female, have slightly more than a 1 in 8 chance of developing a Serious Illness within the next 25 years. That’s why incorporating this cover into your Life Insurance Policy is so important. If the worse is to happen, at least you know you will have some financial security which you can use for what you like. You could use the funds to repay your Mortgage or even use the funds to take a couple of years off work. 

The most common Critical Illness Claims, starting from the top, are the following:

  • Cancer
  • Heart Attack
  • Stroke
  • Multiple Sclerosis

Sadly, one of the most common other causes of Critical Illness Claims are for Children’s Critical Illness. Some Life & Critical Illness Policies will automatically include Children’s Cover within your policy. If this is something you would like within your cover, you will need to check your policy automatically include this or at least allows this at an extra cost.

What cover do I need?

Ideally, you will be covered for the full amount of your Mortgage including any fees which have been added, for the overall term of the Mortgage. For example, £150,000 Mortgage over a 25 year term.

If it is a joint Mortgage, you can take out a joint policy, that would pay out once should anything happen to either of you. This would be a cheaper option to having two individual policies.

Joint Life Policies

Joint Life & Critical illness Insurance Policies tend to cover two parties but will only pay out once. Either to the surviving policyholder or on the diagnosis of a Critical Illness. Once this has been paid, the cover will terminate.

The key advantages of a Joint Life Policy are:

  • Having a Joint Policy is generally much cheaper than having two single policies as provides the cover you need once as opposed to twice if you were to have to single policies.
  • Simplicity: one policy, covering two parties for a defined amount over a set term.

The key disadvantages of a Joint Life Policy are:

  • Cover usually ceases once the benefit has been paid out, leaving the surviving party or party which hasn’t been diagnosed with a Critical Illness without cover.
  • If the cover is protecting a couple and the relationship breaks up, you’ll probably wish to cancel the cover. This means you will now have to take out a new single policy for yourself, which may now be more expensive.

Importance of trusts

If you are taking out a Single Life policy, your Advisor should always put this in trust. It’s usually a simple document your advisor can complete on your behalf which names the trustees (who will manage the Trust – could be the insured) and the beneficiaries (who will receive the benefit upon a successful claim).

The purpose of putting your policy in trust is to protect the benefit payment from any inheritance tax that could potentially be due. A trust will also make the process of paying the funds to your beneficiary or beneficiaries much quicker.

Income Protection

Income Protection is a policy which pays you an income of usually around 60% of your usual monthly salary. A successful claim is usually where the insured is unable to work in their own occupation due to incapacity or illness. This could be due to mental health or a broken bone for example.

Insurers will generally only pay around 60% of your declared income, because they want to give you an incentive to get back to work, if you needed one. 

The benefit will usually be paid monthly after you have been ill for defined length of time and will be payable for up to either 1 year, 2 years or until the end of your policy term. The shorter the length of time the benefit is potentially payable, the cheaper generally your monthly premium will be.

Obtaining Income Protection for Self-employed or those with low to no income

This is where a Specialist Advisor can really show there worth. Most policies will provide you with a percentage of your declared income (around 60%), should you have a valid claim. This becomes a problem when you have no to low income. Or you are Self Employed and only have a declared income of less than £12,000 per year for example, when reality you may earn triple or quadruple that.

There are alternative policies available though that could be perfect for the Self-employed with low declared earnings or those which don’t have any declared earnings such as house persons. This is because you can choose the monthly cover you have up to a certain amount and it isn’t based on your declared earnings. This is called Living Costs Protection and will provide you usually with up to £1,500 per month should you become incapacitated or ill.

If you feel you could benefit from this type of policy  peak to one of our Specialist Advisors.

Most common claims:

The order of the following tends to vary between Insurance Providers. The 3 most common conditions and illnesses claimed on, are for:

  • Mental Health
  • Cancer
  • Musculoskeletal – any conditions affecting Bones, Joints or Muscles

Accident, Sickness and Unemployment (ASU)

ASU policies have tended to be known more as Accident, Sickness and Redundancy policies these days. As effectively, that’ll be the only way you get paid on the Unemployment side of the cover.

You can still get these types of policies, but Income Protection policies tend to be much more comprehensive and therefore popular. Income protection policies would cover the Accident and Sickness part of ASU policies, the Unemployment wouldn’t.

Who needs Income Protection

If you have 2 months sick pay or less with your employer. The likelihood is, Income Protection is statistically the policy you are most likely going to need. So you should strongly consider Income Protection if this is the case.

Who doesn’t need income protection

If you receive full sick pay for at least 6 months, then Income Protection probably isn’t as important as say Life & Critical Illness Cover is.

Protection FAQ’s

How your monthly premiums are calculated:

Monthly premiums for Life Insurance, Critical Illness Cover and Income Protection will all be based on the following: 

  • Amount you’re covered for
  • Your Age 
  • Your Occupation – some are deemed higher risk than others
  • The term over which you are covered or the term over which the benefit will pay
  • Your Lifestyle: for example whether your BMI is too low or too high, whether you’re a Smoker etc 
  • Your Health – for example whether you have any ongoing illnesses, mental or physical. Or whether you have ever been diagnosed with a Serious Illness.
Things to consider when taking out a policy:
  • Don’t always go on cost – is the insurance policy actually cover you for what you need it to?
  • They might be the cheapest, but have you heard of the provider and is the policy any good? You may need the provider to pay out a large sum of money. We would recommend a well-established and trusted provider. 
  • Are you taking out enough cover? If you are just taking out Life Insurance, could your Budget also support Critical Illness Cover or Income Protection.
  • Have you answered all of the questions accurately? If you answer one of the questions inaccurately, it could result in the Provider not paying a claim.

Home Insurance

It will usually be a requirement of the Mortgage Offer that you have a suitable Buildings Insurance policy in place before completion. This is to protect the lenders interests. If the worse was to happen and your house was destroyed by a fire, the Mortgage Lender still requires their loan to be repaid. Are you really going to be able to do that, or even want to do that if your property has been destroyed?

Contents cover is optional, but highly recommended. Once you start adding up everything in your home, such as furniture and electrical equipment. You’ll soon realise that your homes contents are worth thousands of pounds. Is it worth not having these items insured because it costs an extra £10 per month?

Like every case, Home Insurance in some cases will require a Specialist Advisor to ensure that you are getting the best deal available. For example, you could live in a flood risk area and not even realise. Or you may require something precious to you to be insured, that is unlikely to be covered as standard within the policy. In these instances, speaking to one of our Specialist Advisors is going to be invaluable. And will likely save you time and money.

Speak to a Specialist Advisor

Seek Advice from a Specialist. Why not, it’s going to be free. Tell your Advisor about your circumstances, what you feel your needs are and the Advisor will make a recommendation to you based on the cheapest policy which satisfies your needs. 

Insurance policies are complex, and each insurer has completely different policy wording and criteria.

Speak to one of our Specialist Advisors for free and save yourself the effort and time.

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