Income Protection provides the opportunity for people who are out of work due to illness or accident through a monthly payment to provide financial security. When it comes to the amount of cover to take out, this can be determined with the help of an Advisor as well as the amount of time they are prepared to work before they are eligible to put a claim in.
Comparing it to life cover, Income Protection Insurance can be expensive. This is due to the fact that you are more likely to claim on your Income Protection Insurance than claiming on your Life Insurance policy, but the payment of monthly benefit will carry on until you return to work. This only applies to the cheaper version of the policy which only pays out over 24 months.
There are some differences between Income Protection Insurance and Critical Illness Cover. Income Protection Insurance pays out for anything that stops you from working whereas. Critical Illness cover prevents you from working have specified illnesses they apply to.
Applicants who are employed by companies that do not offer generous sick pay schemes or are self employed usually look at this type of policy.
Here at Halifaxmoneyman, we believe in equal opportunity in the situation of a customer taking out insurance. We wouldn’t be doing our jobs if we didn’t mention it!
Our mortgage advice team offers all our customers a free, no-obligation protection review. From this, we will then recommend which products like critical illness and income protection match your circumstances. If necessary, we will then work out the plan that fits well with your available monthly budget.
Providing Income Protection Insurance Advice in Halifax & Surrounding Areas
Life insurance can act as a financial safety net to support your family in the event of your death. There are different types of Life Insurance to choose from and in this article, we will discuss what types are out there and explain why they are essential to take out.
Speaking with a Mortgage and Protection Specialist in Halifax might be very beneficial. Here at Halifaxmoneyman, we offer a free insurance consultation that we highly recommend you take prior to commiting to any insurance policies because you want to find the best one that matches your circumstances.
The reason we offer this is because life insurance can get complex, especially if you are not sure what you’re doing. As well as the different types of life insurance, you also need to choose what your policy covers and how long it will last.
Life insurance is a type of policy that financially supports your family in the event of death. This is through a lump sum of money that is passed down, usually to a family member or friend.
In the event of a claim, you can decide if the cover is paid out all at once or through regular payments.
As well as providing financial support for a family member, it also was introduced to replace lost income or payout outstanding debts owed in the person’s name e.g. a mortgage.
The amount that is paid out alters depending on the type of cover that was taken out. The advantage of life insurance is that you decide what your payout goes towards. For example, you could specify that you want your payout to be used only on debts like a mortgage or car loans.
There are several different types of life insurance policies. Below are the policies that we commonly see people take out as a mortgage broker in Halifax:
A Level Term Life policy provides you with a payout that will remain constant throughout your policy’s duration. This means whether a claim is made 5 years into the policy, or 20 years into the policy, the amount paid will be the same. The duration of the policy is usually between 5-25 years in 5 year increments.
A policy that is usually used to cover a mortgage is Term Life Insurance. It’s common for people to take out this policy that’s in line with their mortgage term. If you do pass away and still have your mortgage to pay off, the policy will pay out. Due to this, the mortgage payments will not have to be relied on by a family member or any other name attached to the mortgage.
Through our experience as a mortgage broker in Halifax, this type of life insurance seems to be the type that is the most popular.
It might be a surprise to some as you may be thinking, why would you want to take out a policy that decreases in value? This policy is targeted at homeowners with repayment mortgages – which is most people. When you do pass away, the policy works by paying off the outstanding mortgage balance.
The policy’s value mirrors the outstanding balance remaining on your mortgage. Therefore, as the amount owed on your mortgage decreases, so does the sum insured.
Decreasing life insurance is usually taken out alongside other insurance products depending on your circumstances. It’s best that you speak to a Mortgage & Protection Specialist in Halifax to give you guidance on what they recommend to be the most suitable insurance for your needs.
This type works in the opposite way to Decreasing Term Life Policy. Increasing Term Life Insurance will payout should you die within your fixed term.
Furthermore, the amount that you have covered increases as your term goes on. Through the duration of your policy term, the fixed amount increases. As you can see, this is different from Decreasing Term Life Insurance.
The reason why this policy was introduced was to protect the policy’s total value against inflation and is usually in line with the retail price index.
We find that Whole of Life Insurance is not the one at the top of the insurance market. Despite this, Whole of Life Insurance may still be helpful as well as being the perfect policy that suits your circumstances.
As stated in the name, Whole of Life Insurance is the type of cover that lasts your whole life. In the event of your death, the policy you took will payout. You will find that Whole of Life Insurance will be a higher cost compared to a Level Term Life Insurance. This is because you are covered for your whole life instead of a fixed term.
As long as you have kept up-to-date with your life insurance payments, your cover will apply for your whole life. This type of insurance is commonly used for family protection and is part of inheritance tax planning.
Joint Life Insurance is the type of policy that you may choose if you are in a relationship or married. This policy will payout in the event of one of you dying. Joint Life Insurance is often cheaper in comparison to both parties having two separate Life Insurance policies. It’s you and your partner’s decision if you want to take one out jointly or two separate ones.
The policy pays out then ends in the event of one of you passing away. This may seem like a drawback to the policy, however, if you intended to take out the policy to pay off your mortgage then you would still be able to do so because the money will be released following the death of one of the policyholders.
In some cases, your place of employment may offer you Death in Service cover as part of their employee benefits package. This is something that not all workplaces offer as they are not obligated to do so.
The cover works by paying out a lump sum of cash to the employee’s family or a person of their choice if they die. Usually, this sum is up to 5 times their annual salary. Unlike the other types of policies, there is a specific limitation on what can be done with the employee’s money.
The payout is not associated with if an employee dies in the workplace.
Life Insurance options is something you shouldn’t disregard just because you’re a single home owner.
It’s not unusual for people to forget life insurance when they have settled into a new place and are currently living on their own without children or a partner. Unfortunately, Life Insurance doesn’t always apply to single homeowners which is why people choose to ignore it.
Even if it might not apply to you now, your circumstances could change in the future, which is why you should think about it because Life Insurance could become a crucial thing to have.
To find out if it’s worth taking out Life Insurance as a single homeowner, get in touch with one of our Mortgage Protection and Insurance Specialist in Halifax.
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
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.
Mortgage Protection Insurance is a term used to encompass various types of cover designed to protect borrowers from events which could severely impact their ability to maintain mortgage payments.
There are different variations but when connected to a mortgage they are all there to provide peace of mind and usually fall into the following categories:
As a rule, if the policyholder dies within the term, then the sum assured should be enough to pay off the outstanding mortgage balance and ensure the borrower’s dependants aren’t left with a debt they might not otherwise be able to manage.
Our advisors can run through all the different types of life cover and recommend the most suitable plan for you.
Critical Illness Insurance works in a similar way to Life Assurance, in that it is usually taken for a specific term of years and can have the different options such as level/increasing etc. It is designed to pay out a lump sum and, like Life cover, for borrowers it is typically taken on a decreasing term basis in line with the reduction of your mortgage balance.
The key is that the benefit is paid if you fall victim to one of a number of specified critical illnesses and pays out whatever the long-term prognosis of that illness. The type of illnesses covered vary from company to company, that’s why this type of insurance cannot be solely price driven and advice is recommended.
In practice many companies will offer Life and Critical Illness Critical cover as a combined policy and would usually pay out on the “first event” i.e. whatever happens first – either death or serious illness – the pay-out is made. They can also be written on a single or joint life basis
Whereas Life and Critical Illness cover pay out a lump sum, Income Protection pays out a monthly sum designed to replace your wages in the event of you being unfit to work. Unlike Critical Illness cover, there are no restrictions on the illnesses or injuries covered, the only factor being whether they make you unfit to work. There are however restrictions on how much you can cover and how quickly benefits would start to be paid.
Like Life and Critical Illness cover, these policies are underwritten based on your health and lifestyle at the time you apply. All income protection policies are written on a single life basis.
Probably the least common of the mortgage protection type 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.
However, 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. Thus, it can replace the income of the main breadwinner for a number of years, dependent upon a particular client’s circumstances and, because of this would usually be written on a level or basis, or an index-linked basis designed to keep up with inflation.
There’s an adage that says you can never have too much insurance. Certainly, many people have one or more of the different types of policy and it would be wrong to think of Mortgage Protection Insurance as just an “either/or” choice. However, in the real world, affordability plays a massive part, so whilst it would be fantastic to cover yourself for every potential opportunity, a good advisor will sit down with you and tailor the type of cover to be the most suitable combination to your family’s priority and budget.