The Mortgage Quarter’s Richard Grigg gives us the latest rundown on all things insurance, whilst reinforcing the importance of personal protection.
The Importance of Personal Protection
This year has been a strange one, there’s no doubt about it. We have all been forced to slow down and reflect upon the things that really matter; family, friends and good health. What this pandemic has also reconfirmed to many of our clients is the importance of personal protection; that is having the right cover in place to ensure that you don’t lose the roof above your head, at the time you need it most.
At The Mortgage Quarter, we ensure that every angle is looked at and now is as good a time as any to talk through the differences and details of the personal protection cover. In addition to this, we highlight the key points that make a good policy.
Life insurance. It’s not something many of us want to think about but it is vitally important. The reality is that every 22 minutes a child loses a parent they rely on financially.
What is it? Life insurance pays out a lump sum so your family don’t have to worry about money. Most people will know about this, how it works and why it’s important so instead the focus is on the elements you might now know.
Most policies come with Terminal Illness cover built-in (not to be confused with Critical Illness Cover, which is up next). This pays the life insurance sum early, should your family need it. Mostly these are put in place to ensure your mortgage is cleared if something bad happens. What is commonly missed is that in very few cases, the mortgage is less than the income of the life insured. Could your family survive on their salary alone should you no longer be with them?
If not, family income benefit plans can ensure a regular income payable on death that pays until a predefined point in time. This ensures that your family receive an income rather than a single lump sum, which may not cover them.
Critical Illness Cover
Critical Illness Cover – Confused regularly with Terminal Illness (as above).
What is it? Critical Illness cover pays a lump sum should you be diagnosed with a life-impacting illness. The most commonly claimed for conditions are Cancer, Heart attack and Stroke, but this will also cover claims for Multiple Sclerosis and Paralysis.
It’s a good idea to remember that policies with broader definitions are generally more likely to payout than the more specific ones. Some of our providers will even make additional payments over and above the main policy payout in the event of a less severe illness. At no point will our providers ask for the money back if you get better. The payments are made to protect you from the fallout from the mental and physical toll as well as the time off work and additional costs you may incur while you fight the illness and recuperate.
What would happen to your family and home if you were unable to work?
Income Protection is something that is rarely discussed and less available to the general market. Back pain, stress, anxiety and depression are often talked about in the news and papers as fears in people’s minds and numbers, in general, are on the rise. Income Protection provides you with a regular income should you be unable to work.
What is it? Not to be confused with redundancy or unemployment cover, Income Protection pays an amount inline with your income every month for either a predetermined time or until you retire. It is available to both the employed AND self-employed and ensures you have a sufficient income to maintain not only your mortgage but your other bills and needs as well.
Building and Content
Everyone has something, be it a buildings only policy or a full buildings and contents plan. Do you know what you are actually covered for?
Having insufficient cover for everything in your home and thinking things are covered when they aren’t, are common issues we see. The premiums are generally pretty low but that doesn’t mean the cover isn’t. When insuring a property it’s vital that you remember to insure the general everyday household items like carpets, clothes and kitchens as well as those expensive electricals. Essentially these are all very important and should you have a fire or water damage in the house, everything needs to be replaced!
Accident & Sickness and Unemployment Cover
Accident Sickness and Unemployment cover, covers a predefined amount for a short term period, normally 12 months. Providing the benefits of a low-cost Income Protection scheme with the additional benefit of cover against unemployment. However, at this time, the cover is very difficult to obtain and when it is the costs can be much higher than expected.