Life insurance protecting yourself & your family

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PROTECTION PLANS WITH NO INVESTMENT ELEMENT WILL HAVE NO CASH IN VALUE AT ANY TIME AND WILL CEASE AT THE END OF THE TERM. IF PREMIUMS ARE NOT MAINTAINED THEN COVER WILL LAPSE.

Life insurance pays out a lump sum to your beneficiaries when you die.

In summary:

It gives you protection for the policy term

It pays out a cash sum if you were to die during the policy term

The cash lump sum can pay off your mortgage or help your family

It comes with a range of cover options, and therefore a range of monthly premium that can suit your needs and budget

You can add critical illness cover to a life insurance policy

Life insurance is not compulsory, when you purchase your home. It is taken for peace of mind that your loved ones won’t have to struggle financially in the event of your death, as the lump sum paid out at your death can extinguish an outstanding mortgage commitment and/or help out with your dependants financially.

You should look for the best deal, not the cheapest one. Paying slightly higher premiums may mean you get additional benefits and the comfort that it will have been money well spent.

As life insurance becomes more expensive with age, it makes financial sense to take out a policy early in your life, and certainly at the start of a new mortgage, if you do not have an adequate policy in place already.

You may already have life insurance through your employer, which is known as death-in-service policy. In which case, you should review the arrangement and check if this is sufficient to cover your mortgage for example. 

Life insurance is often taken out together with critical illness cover, which pays out a lump sum upon diagnosis of a specified critical illness.

Another type of cover is income protection, which pays you a monthly income if you are unable to work due to accident or illness. Income protection insurance is also not compulsory, the choice to protect your future is only yours..

The choice for the right cover will depend on your individual circumstances. Please talk to us and we will be able to recommend the most suitable cover for you.

When you buy life insurance you pay a monthly premium, usually for a fixed term. If you die during this term, the policy will pay out a tax-free cash lump sum to your dependants. 

When choosing a life insurance policy you will need to choose:

• How much will the policy will pay out (e.g. the full amount outstanding on your mortgage). The higher the payout, the more you pay monthly for the insurance premium.
• How long will the policy last for (e.g. the same term as the mortgage, or for your lifetime, etc). The longer the term, the more you pay monthly for the insurance premium.
• Who will the payout go to if you die (e.g. your spouse, children, etc)

There are three main types of life insurance: level term assurance, decreasing term assurance and whole-of-life cover.

• With level term assurance, the amount of cover you have remains the same during the term of the policy. This cover may be suitable alongside interest-only mortgages, as the mortgage amount you owe remains constant and does not decrease over time. The term of this life policy is generally chosen to at least match the term of the mortgage. You will get a pay-out if you die within the term.
• With decreasing term assurance, as the name suggest, the amount of cover reduces over time. This cover is generally suitable if you take out a repayment mortgage, so that the amount of cover you have decreases along with the mortgage balance you owe. The term of this life policy is generally chosen to at least match the term of the mortgage. You will get a pay-out if you die within the term.
• Whole-of-life insurance protects you for your lifetime, but means you’ll pay premiums right up until the point you die and they are typically more expensive, as the pay-out if of course guaranteed when you die.

The amount you pay for life insurance is based on your age and health, if you have any pre-existing medical conditions, whether you are a smoker, how long you want cover for (term), how much cover you need and the type of policy.

Premiums for decreasing policies tend to be cheaper than for term assurance policies because the level of cover reduces over time. Premiums are most expensive for whole-of-life insurance because this type of cover provides protection for your lifetime.

So in summary:

• The higher the amount of cover, the more it will cost you monthly
• The longer the policy lasts for, the more it will cost you monthly
• The older you are, the more expensive your policy is likely to cost
• If you smoke, or have a pre-existing medical condition, it will generally cost more

The choice of what insurance depends on your specific circumstances and needs, as well as the monthly budget you have available to pay for the monthly premium.

Please talk to us for a personalised quote.

CRITICAL ILLNESS PLANS MAY NOT COVER ALL DEFINITIONS OF A CRITICAL ILLNESS. THE DEFINITIONS VARY BETWEEN PRODUCT PROVIDER AND WILL BE DESCRIBED IN THE KEY FEATURES AND POLICY DOCUMENT IF YOU GO AHEAD WITH A PLAN.

• Critical illness cover gives you protection for the policy term
• It pays out a cash sum if you were to be diagnosed with a specified critical illness during the policy term
• The cash lump sum can pay off your mortgage or help your family
• It comes with a range of cover options, and therefore a range of monthly premium that can suit your needs and budge
• You can take out Critical Illness with Life Cover, which means you would also be covered should you die or be diagnosed with a terminal illness during the term of the policy.

There are different types of critical illness cover:

• Increasing cover: The payout amount and premiums rise with inflation each year.
• Level cover: The payout and premiums stay the same throughout the policy.
• Decreasing cover: The payout reduces each month, generally in line with a repayment mortgage. Premiums are usually lower compared to level cover.

The choice of what insurance depends on your specific circumstances and needs, as well as the monthly budget you have available to pay for the monthly premium.

If you become ill or have an accident, an income protection policy could pay you a regular monthly sum, tax-free.

This type of cover usually pays out until retirement, death or your return to work. However, you can also choose shorter term policies, at a lower cost. 

Income protection policies do not pay out if you're made redundant.

These policies can cover you up to a set percentage of your income, e.g. 50-65%, or up to a set monthly amount, e.g. £2,000, depending on the provider.

It is an important insurance cover to put in place for your peace of mind.

If you are employed, employers only tend to support their staff for one year or so when they are off sick from work. Statutory sick pay and state benefits also tend to be very much insufficient. This is why everyone of working age should consider an income protection insurance.

A mortgage payment protection insurance policy, also known as MPPI, is the same as an income protection policy, and it will pay out a monthly amount that will cover your regular mortgage monthly repayment.

Please talk to Your Mortgage Experts for more details.

This Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against the loss of income. For impartial information about insurance, please visit the website. 

Please note that by clicking on the link above you will leave Your Mortgage Experts' website.  Your Mortgage Experts has no control or responsibility for the pages you are about to access, or to where any subsequent links may take you. 

It is important that you talk to us to receive advice on which insurance policy is right for you. However, we have listed here a few questions for you to think about it, as it will help with the conversation with the adviser. Please also check out the sections that explain you some basic facts about life insurance, critical illness cover, and income protection insurance. There are several variations of these policies and each insurance provider is different.  

Start yourself by asking a few simple questions:

• How much do you need cover for?
• How long you need cover for?
• How do you want the payout amount to be paid?

At Your Mortgage Experts we will help you answer these questions, and more.

If you have a mortgage and you die, will your family be able to continue to afford the mortgage? The option is to choose a cover amount that will pay off the mortgage balance outstanding at the time of death. You may also want to consider an additional amount for other expenses (such as other debts, or education fees, or a pot of money to live off, etc. The amount of cover you need will depend on your circumstances, as well as you monthly budget.

You can choose to be covered until you have a mortgage, and choose a decreasing term life cover. This policy reduces the amount covered each month, in line with your repayment mortgage.

Alternatively you can choose to be covered until you die, and apply for a whole of life cover; this type of cover tends to be more expensive.

You can choose from two types of payout, depending on the policy you choose:

• A lump sum: This can pay off your mortgage, or give the ones you leave behind money to live off.
• An monthly income: This could help your family pay their monthly expenditures, e.g. mortgage or rent. The income usually stops at the end of the policy's term. Please note that a whole of life cover, and some other policies such as over 50s life insurance policy, only have the option to receive a lump sum as payout. 

It is important that when you choose a policy, you are conformable with the regular monthly premium payments, for the duration of the policy. Depending on your budget, there may be several options which would be suitable to you, and you should discuss this with us.  If you don't pay your premiums on time your cover will stop, your benefit will end and you'll get nothing back.

At Your Mortgage Experts we will look at your specific needs and circumstances, we will be able to discuss options, and present you with a recommendation that will meet your needs and suit your monthly budget.