What do you need to consider when protecting your mortgage, and ultimately your home? The What Ifs….
What would happen if died? For most lenders, the protection of a mortgage is no longer compulsory, but it is essential for your own peace of mind.
The death of a partner, or a provider, may have significant financial repercussions and so financial protection in the event of death cannot be overlooked. It is better to leave nothing behind than a mortgage debt for someone else to struggle with.
For most, a simple life assurance policy designed specifically around your mortgage will be relatively inexpensive. The amount of cover required will need to be sufficient to repay the mortgage in the event of death.
What will happen if became critically ill or I had an accident and couldn’t work?
The need for financial protection in the event of death is one which most of us can readily identify but what about ill health? It is a fact that 1 in 3 of us will develop a cancer during our lives. (Source: UK National Statistics). A harrowing thought. Luckily advances in medical technology mean that many types of cancer can be treated successfully. But what sort of impact would contracting such a disease have on your life?
State benefits alone would not be enough to provide for most of us. If employed, your employer may continue to pay you for three or six months, but what would happen if you couldn’t return to work? Well, ultimately if you could not afford to repay the mortgage you could lose your home. So for many, financial protection in the event of ill health is just as important as protection in the event of death.
When considering the protection of a mortgage there are two important types of protection, Critical Illness Cover and Income Protection Insurance.
Critical Illness Cover would provide a lump sum in the event of the insured suffering from a qualifying Critical Illness. The definitions and types of Critical Illness covered by insurers vary but the main ailments may include:
Bacterial Meningitis, Benign Brain Tumour, Blindness, Cancer, Cardiomyopathy, Chronic Rheumatoid Arthritis, Coma, Deafness, Heart Attack, Kidney or Liver Failure, Major Organ Transplant and Stroke.
An Income Protection Insurance policy would provide an income to the insured should they not be able to work due to accident or illness. Most insurers will continue to pay the insured until they return to work or reach their selected retirement age. There are so many variables to consider when looking at your own protection