Life Insurance is a vague term as it covers much ground; there are several different types of Life Insurance, so this mortgage protection guide will explain to you what it is and why life insurance is essential to take out for any homeowner.
If you’re looking to take out Life Insurance, it’s worth speaking with a Mortgage & Protection Specialist expert in Sunderland. We offer Life Insurance Advice in Sunderland, and we would advise that you take the Free Insurance Consultation that we provide to new/existing customers before making any drastic decisions as it may not match your circumstances.
Particularly if you don’t know what you are doing, there are many different types of life insurance. It can get complicated, and you also need to understand which is the best-suited policy that covers you best and how long the policy lasts.
Life Insurance pays out a lump sum of money in the event of death. The money gets passed down to a family member or friend. In the event of a claim, the person who takes out the cover can choose to either pay out the whole sum insured at once or through regular payments.
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The sum that is paid out changes depending on the type of cover that got taken out. Thankfully with Life Insurance, you can choose how the payout gets distributed. You select your specifics; for example, you may only want the money to get used to cover the remaining debts on the mortgage.
There are lots of various types of Life Insurance policies. It would be wrong to think of Life Insurance as just an “either/or” choice, as many people now have one or more of the different types of cover. Affordability plays a large part, and whilst it would be fantastic to cover yourself for every potential opportunity, that’s not always possible.
Here we have listed the different type of Life Insurance available. However, to find out more, speak with one of our Dedicated Protection Specialists Advisors in Sunderland today.
With Level Term Life Insurance, you will still get a payout. However, you will only get covered for a fixed ‘term’. This policy only pays out if you die within your policies term. They usually run between 5-25 year terms in 5-year increments.
Term Life Insurance is often used to cover a mortgage. People usually take out this policy that’s in line with their mortgage term. Therefore, if you were to die and still have your mortgage to pay off, the policy will pay out the This means that the mortgage payments will not fall to family members or any other name attached to the mortgage.
As a Mortgage Broker in Sunderland, we’ve found that this type of Life Insurance policy is the most popular. You may be asking, “why would you want to take out a policy that decreases in value?”. Well, this policy is targeted at homeowners with repayment mortgages – which is the majority of people. This policy is usually taken out to pay off the outstanding mortgage balance should you die.
The policy’s value mirrors the outstanding balance remaining on your mortgage. As the amount owed on your mortgage decreases, so does the sum insured.
Decreasing Life Insurance is typically taken out alongside other Insurance products depending on personal circumstances. This is why we always recommend speaking to a Mortgage & Protection Specialist in Sunderland, and we can help recommend the most suitable insurance for your needs.
This type of Life Insurance policy will still payout if you die within your fixed term. It works in the opposite way to Decreasing Term Life Policy.
The difference with Increasing Term Life Insurance is that you are covered for increases as your term goes on. It will increase by a fixed amount until your policy term ends.
This type of Life Insurance was introduced to protect the policy’s total value against inflation and is usually in line with the retail price index.
As a Mortgage Broker in Sunderland, we’ve learnt that the Whole of Life Insurance policy is not at the forefront of the insurance market. However, it is still helpful, and it may be the policy that suits you most.
The Whole of Life policy is the cover that lasts your whole life. When you die, the policy that you took will payout. The costs of Whole of Life Insurance will be a little more than a Level Term Life Insurance. However, you are covered for your whole life and not just a fixed term. Assuming that you’ve kept up-to-date with your life insurance payments, your cover will apply for your entire life.
This type of insurance is usually used for family protection and part of inheritance tax planning.
If you are in a relationship/married, you could consider taking out a Joint Life Insurance policy that will payout in the event of one of you dying. You could still have two separate Life Insurance policies if you want to. However, having a Joint Life Insurance policy is often cheaper than taking out two different ones.
This policy works because if one person dies, the policy pays out and then ends. This may seem like a downside to the policy, but if you initially took out the policy to pay off your mortgage, you would still be able to do so as the money will be released after the death of one of the policyholders.
This type of Life Insurance cover may be offered to you by your place of employment. Your company is not obligated to provide Death in Service cover. However, some do as part of their employee benefits package.
Death in service is usually a lump sum of cash paid out to an employee’s family or a person of their choice if they die. This sum can be up to 5 times their annual salary. There are no specific limitations on what can be done with the employee’s money.
Just because you are a single homeowner doesn’t mean that you should disregard all Life Insurance options.
If you have settled into a new place and are currently living on your own without children or a partner, it’s not unusual for people to forget about life insurance. People also sometimes choose to ignore it, and this is because it doesn’t always apply to single homeowners.
What you should think about, though, is that your circumstances could change in the future, and if they do, then Life Insurance could become an essential thing to have.
Please speak to one of our Mortgage Protection and Insurance Specialist in Sunderland and determine whether taking out Life Insurance as a single homeowner could be beneficial for you.
We want to make sure that you have the right policies in place to allow you to leave your family in the best position possible if you die. Taking Life Insurance will give your family financial certainty and will take a little stress off them in an already difficult time.
As a Mortgage Broker in Sunderland, we know that Life Insurance, no matter the type of cover, is highly beneficial and can put you at ease knowing that your family won’t have to pay for your debt payments.
If you want to find out more about Life Insurance, take up our free Insurance consultation in Sunderland. We will explain the policies available to you and why they could benefit your family’s personal and financial situation in the future.
But don’t just take our word for it, look what our customers have to say about our staff. Just like our mortgage protection and specialist Mizan:
We always ask our customers to review us. We do this because our reviews reflect a complete picture of our service from start to finish and highlight how amazing our team is.
As a Mortgage Broker in Sunderland, we’ve found that Life Insurance is typically taken out in combination with other policies, depending on your situation. The other Insurance options are:
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Recent research undertaken by Scottish Widow has shown that around 4.5 million men with dependent children are not covered by any life insurance.
It was visible that only 16% of Fathers have made sure to cover their relatives financially by applying for Critical Illness Cover in Sunderland. This cover is vital for unforeseen circumstances that may happen, including certain medical conditions.
The results have shown that 22% of fathers were not prepared, despite having options to take out life insurance. Only 28% were confident that their savings could securely pay for up to three months or more.
Most people have the option to invest in life insurance until a later time. Mortgage Advisors typically recommend taking out protection when taking out a mortgage, and additional other life events may get a person to start thinking about securing future finances, this can include death within a family member or recent birth of a relative.
Although people avoid the specific topic of conversation – it’s the thought process behind death why most people try to defer the task of obtaining life insurance.
The same applies to Income Protection cover in Sunderland. Most people look to their Employers in the hope they will take care of finances if sickness occurs, but this outcome isn’t guaranteed.
It’s often cheaper to take out cover in preparation at an earlier date.
Life Cover in Sunderland can be very inexpensive for most people. You might only need decent cover for a short number of years, for example, until your mortgage is repaid, or your children are out of full-time education.
Insurers calculate the risk of a pay-out when calculating your monthly premiums, and if they think the chances are low, then cover will be cheap, sometimes as little as £10 per month.
The results have shown that 22% of fathers, although having the option to take out life insurance, were not prepared for any unforeseen circumstances.
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.
It’s very important to us that all of our customers are given an equal opportunity to take insurance our through ourselves.
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.
Providing Income Protection Insurance Advice in Sunderland & Surrounding Areas
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 in Sunderland is much more expensive than life cover because the chances of you making a claim are far higher.
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.
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.
Mortgage Protection Insurance is an umbrella term that encompasses different types of cover. The aim is to protect borrowers from events that could affect their ability to keep up with mortgage payments. When connected to a mortgage, they provide peace of mind and a sense of security to the borrowers.
There are generally two types of life cover; “Whole of Life” or “Term Assurance.” The whole of Life cover is guaranteed to pay out a lump sum on death, whenever it occurs. Term Assurance pays out if you die within a specified term of years.
There are also different types of term assurance – for example, “level,” “increasing,” or “convertible.” The type most commonly used as mortgage protection these days is “Decreasing Term Assurance.”
If you look at linking this to a repayment mortgage, the sums assured reduces at roughly the same rate as the mortgage balance. Because the risk to the insurer diminishes over time, the premiums are generally cheaper than other types of life cover if the policyholder dies within the term.
Then the sum assured should be enough to pay off the outstanding mortgage balance. Getting this should ensure the borrower’s dependents do not get left with a debt they might not otherwise be able to manage.
Some people say that life cover gets taken for the benefit of other people. Because, sadly, you won’t be around to see any interest.
However, these days, many people in Sunderland survive conditions that once might have been fatal. Nevertheless, while undergoing treatment and recovery, it could affect your ability to meet your financial commitments. Leading to the development of Critical Illness cover in Sunderland.
Working in a similar way to Life Assurance, in that gets taken for a specific term of years. It can also have different options, such as level/increase.
They get designed to pay out a lump sum and taken on a decreasing term—basis in line with the reduction of your mortgage balance. The key is that the benefit gets paid if you fall victim to one of several specified critical illnesses.
It will then pay out whatever the long-term prognosis of that illness. The type of illnesses covered varies for each provider. In general terms, insurers usually cover between 40 – 50 specified conditions, including cancer, heart attack, and stroke. Pay-outs depend on meeting the required level of seriousness of the particular situation suffered.
The life companies all work to at least the pre-designated clinical definitions as prescribed by the Association of British Insurers.
What we mean is they can’t just arbitrarily decide that you’re not ill enough. Hopefully, if your treatment is successful, it means that you can benefit by no longer having a mortgage to pay after your illness.
In practice, many companies will offer Life and Critical Illness Critical cover as a combined policy. Usually, a pay-out on the “first event,” i.e., whatever happens first, either death or severe illness. They can also get 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 amount. They got designed to replace your wages in the event of you being unfit to work in Sunderland. Unlike Critical Illness cover, there are no restrictions on the illnesses or injuries covered.
The only factors 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 get paid because the insurers want you to have an incentive to return to work rather than being better off on sick.
Typically, the most you can cover would be approximately 55%-65% of your income. Benefits would begin to get paid after a “deferred period.” Usually, it equates to the length of time you would receive sick pay from your employer.
Benefits would continue to get paid for as long as you remain unfit to work. Or until the policy term ends, whichever comes first. However, to make premiums cheaper, most companies offer a “budget” option whereby benefits would get paid for a shorter period.
Usually between 2-5 years – to at least allow you to make alternative arrangements. In case it looks like you’ll get incapacitated for longer than that.
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 get written on a single life basis.
Similar in many ways to Income Protection, you are covered by these policies if made unemployed. Benefits get usually linked to your mortgage and other costs (rather than necessarily your wages). It would usually be paid one month “in arrears” after a successful claim.
These policies only get underwritten at the time of a claim. Rather than at the outset, which can sometimes mean there can be some confusion/delay as to whether demand would get met.
They are a useful safety net if you get made long-term unemployed. But be sure to check the details of how/when any unemployment benefits would get paid out. As it may be that you would have returned to work before any monies become due.
Probably the least common of the “mortgage protection” type policies. However, these can often be valuable, particularly for those with young families in Sunderland. These plans can get taken to cover Life and Critical Illness and get underwritten on the application.
Unlike the traditional forms of policy or instead, pay out a lump sum. The covers would pay an annual or monthly income for the remainder of the term of the plan. Thus, it can replace the income of the primary breadwinner for several years.
Dependent upon a particular client’s circumstances. 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 whether you are a First Time Buyer in Sunderland. A Buy to Let Landlord in Sunderland, or ready to Remortgage in Sunderland, looking into insurance is always hugely beneficial.
Many people have different types of policies, and it would be wrong to think of these as an “either/or” choice. You can have more than one kind of Mortgage Protection Insurance. However, in the real world, affordability plays a massive part while it would be fantastic to cover every type of Mortgage Protection Insurance.
A good Mortgage Advisor in Sunderland like us will sit down with you and tailor the type of cover to be the most suitable combination to your family’s priority and budget.
If you do take more than one policy, your Mortgage & Protection Advisor in Sunderland, typically, we would usually place all the cover with one provider. To help save you the additional policy administration charges which individual policies carry.