Mortgage Protection Insurance Explained in Derby

Mortgage protection insurance is a type of insurance that provides protection to homeowners from financial difficulties that may arise from unforeseen events, that could affect their ability to keep up with their mortgage payments.

This type of insurance is designed to cover a range of circumstances that may affect the borrower’s ability to meet their financial obligations, such as death, critical illness or disability.

There are different types of mortgage protection insurance, but they all aim to provide peace of mind to homeowners.

The most common types of mortgage protection insurance include life insurance, critical illness cover, income protection insurance and family income benefit. These policies provide different types of cover to ensure that homeowners can meet their financial obligations, regardless of their circumstances.

Life Insurance

When a homeowner takes out a life insurance policy, the sum assured should be enough to pay off the outstanding mortgage balance, if the policyholder dies within the term.

This is to ensure that the borrower’s dependants are not left with a debt they may not be able to manage.

Our protections advisors in Derby can help to identify the most suitable policy for you based on your needs and circumstances. We can help you understand the different options and recommend a policy that meets your requirements.

Critical Illness Cover

Critical illness cover is a type of insurance that pays out a lump sum if the policyholder is diagnosed with a critical illness specified in the policy.

The benefit is paid regardless of the long-term prognosis of the illness. This type of insurance is usually taken for a specific term and can have different options such as level or increasing cover.

For borrowers, critical illness cover is typically taken on a decreasing-term basis to align with the reduction of their mortgage balance.

While the type of illnesses covered varies from company to company, it is important to note that this type of insurance cannot be solely price-driven, and advice is recommended.

Many companies offer life insurance in Derby and critical illness cover in Derby as a combined policy that pays out on the first event. This means that the policy will pay out on the first occurrence of either death or serious illness. These policies can be written on a single or joint life basis.

Income Protection

Income protection is a type of insurance that pays out a monthly sum designed to replace your wages if you are unable to work due to illness or injury.

Unlike critical illness cover, income protection has no restrictions on the illnesses or injuries covered; the only factor is whether they make you unfit to work.

That being said, there are restrictions on how much you can cover and how quickly benefits would start to be paid. All income protection policies are written on a single life basis and are underwritten based on your health and lifestyle at the time of application.

Family Income Benefit

Family income benefit is probably the least common of the mortgage protection policies but can often be valuable, particularly for those with young families.

These plans can be taken to cover life and/or critical illness and are underwritten on application in the same way as mentioned above.

Unlike the traditional forms of policy, rather than pay out a lump sum, the cover would pay an annual or monthly income for the remainder of the term of the plan.

This can replace the income of the main breadwinner for a number of years, depending on the particular client’s circumstances.

Due to this, these policies are usually written on a level basis, an index-linked basis designed to keep up with inflation, or a combination of the two.

Summary

There is an old adage that says you can never have too much insurance. While it would be fantastic to cover yourself for every potential opportunity, affordability plays a massive part in the real world.

Therefore, a good advisor will sit down with you and tailor the type of cover to be the most suitable combination for your family’s priority and budget.

It is essential to understand that mortgage protection insurance is not an “either/or” choice, and many people have one or more of the different types of policies.

The key is to have the right cover in place that provides adequate protection for you and your loved ones in the event of unforeseen circumstances.

Working with a trusted protection advisor in Derby can help you make an informed decision and ensure that you have the right coverage for your needs.

Life Insurance Advice in Derby

Life insurance is designed to pay out, usually in a lump sum, in the event of death.  With regards to your mortgage, the sum assured should be enough to pay off your outstanding balance.

Here is some information about the most popular types:

• Whole of Life Insurance
• Term Assurance
• Family Income Benefit
• Joint Life Insurance
• Death in Service
  

Whole of Life Insurance

Whole of life insurance does not have an end date, therefore, providing premiums are being met the policy will pay out.  Generally speaking, this type of insurance is used for family protection and also as part of inheritance tax planning. 

Term Assurance

Term assurance is the most popular type of family insurance used to cover a mortgage. 

Our Advisors in Derby will recommend the sum assured and term of the policy, usually to run in line with your new mortgage.   The providing that all premiums are maintained, the sum assured will be paid out if you were to die during the term. 

There are various types of Term Assurance available, such as decreasing and increasing cover.  As part of our personal protection review, the most suitable policy for your needs will be recommended. 

Family Income Benefit

This is another version of Term Assurance, where instead of the sum assured being paid as a lump sum on death, it’s paid as an agreed monthly payment.  This is very good for families looking to insure an income. 

A good advisor, will usually recommend a mixture of insurance types tailor made to match your personal and family requirements. 

Joint Life Insurance

If you are part of a couple, you could consider taking out a single life policy that will pay out in the event of one of you dying.

This can be cheaper than paying the premiums on two separate policies, but bear in mind that joint policies only pay out on the first death, after that the cover ends. 

If you had two separate policies, the second policy would remain in force even after a claim had been made on the first.

Death in Service

Many companies offer their employees family a lump sum payment if the staff member dies while they are employed by the firm.

Although this doesn’t mean the death has to be at the workplace or in any way related to the job done.

This cover will most likely end as soon as you leave the company.

Our Insurance Advice Service

It’s very important to us that all of our customers are given an equal opportunity to take insurance our through ourselves.  We wouldn’t be doing our job right if we didn’t mention it! 

We offer all of our customers a free, no-obligation protection review where we’ll have a look at any existing policies you have in place and assess their suitability.  We’ll then recommend which products, including critical illness and income protection that meet your needs.  If required, we’ll then tailor the plan to match your available monthly budget. 

Critical Illness Insurance Advice in Derby

Critical Illness Insurance pays out a lump sum if you are diagnosed with one of the conditions on the policy such as Cancer, Heart Attack or Stroke. Sometimes Insurers receive criticism for declining claims when someone is very ill but with an illness not covered on their policy but most major providers actually pay out over 90% of claims.

If claims are denied it can also be because the claimant did not disclose an underlying medical condition they have when they took the policy out.

In the event of a claim the lump sum is paid out irrespective of whether the claimant returns to work or not, the key thing is whether the illness they had matched the definition on their policy.

The claimant can use the lump sum they receive for any purpose they wish. Be this to repay their mortgage, pay for medical care or make modifications to their home.

Different insurers cover different illnesses on their policies and it’s wise to take advice prior to selecting a policy. This will ensure that you end up with one that is suitable for your needs. Critical Illness Insurance is much more expensive than life cover because the chances of you making a claim are far higher.

Your chances of surviving the types of conditions covered are far higher than they were 30 years ago. However, if you are unfortunate enough to contract one of them then there are often financial consequences. Hence the popularity of the cover, especially for applicants who have mortgages or children to think about

Our Critical Illness Insurance Advice Service

It’s very important to us that all of our customers are given an equal opportunity to take insurance our through ourselves.  We wouldn’t be doing our job right if we didn’t mention it! 

We offer all of our customers a free, no-obligation protection review where we’ll have a look at any existing policies you have in place and assess their suitability.  We’ll then recommend which products, including critical illness and income protection that meet your needs.  If required, we’ll then tailor the plan to match your available monthly budget. 

Income Protection Insurance Advice in Derby

Income Protection Insurance is designed to pay out a monthly benefit if you are unable to work due to illness or accident. The applicant can decide along with the help of their advisor how much cover to take out. Also how long they are prepared to wait before they are entitled to put a claim in.

Income Protection insurance can be expensive compared to life cover. As you are far more likely to be unable to work due to illness than die. The monthly benefit continues to be paid out until you return to work unless you have selected the “Budget” version of the policy. This typically only pays out for 24 months but is much cheaper.

The big advantage of Income Protection Insurance is that unlike Critical Illness Cover it pays out for whatever is preventing you from working. Unlike Critical Illness which is just a list of specified illnesses.

This type of policy is very popular amongst the self-employed and also employed applicants who do not benefit from generous Employer sick pay schemes.

Our Income Protection Insurance advice service

It’s very important to us that all of our customers are given an equal opportunity to take insurance our through ourselves.  We wouldn’t be doing our job right if we didn’t mention it! 

We offer all of our customers a free, no-obligation protection review where we’ll have a look at any existing policies you have in place and assess their suitability. We’ll then recommend which products, including critical illness and income protection that meet your needs.  If required, we’ll then tailor the plan to match your available monthly budget.