So you’ve got your mortgage sorted and you’re ready to move into your new property or you’ve secured a remortgage on your existing property. Now it’s time to think about how you can protect yourself and family should anything happen that could jeopardise your financial situation.
Buildings Insurance is a legal requirement
First and foremost, if you own a property you will need to have buildings and contents insurance. Building insurance is a legal requirement. You must prove that you have it in place when you take out your mortgage. Contents insurance however is not a legal requirement but it really is common sense to have a policy in place that would pay out should you suffer damage to your possessions. Unexpected events such as floods, fires, burglary etc can and do happen more often than you might think. Imagine losing a treasured possession or entire rooms full of furniture and not having the funds to cover the cost of replacing or rebuilding it. Buildings and Contents insurance tends to be grouped together, is quite reasonably priced and will certainly feel cheap should you ever find yourself needing to claim on it!
If you cannot pay your mortgage, the lender has the right to repossess your home
But now that you’ve taken on a sizeable debt in the form of a mortgage, it really is vital to think about how you would cover that cost should anything happen to you or your income. If you are unable to pay your mortgage, the lender does have the right to repossess your home. This is not something they like to do but if you can’t make the payments, you may leave them no choice. Insurance to cover the mortgage should the worst happen is the best way to protect your home.
There are various different ways that you can set up your insurance cover in order to best suit your individual needs
Firstly, you should consider a Life Assurance policy. This would pay out a lump sum if you die. Usually you structure the policy so that the lump sum covers the remaining balance on your mortgage (and potentially more) so that your remaining family don’t need to worry about how to pay the mortgage when they are already coming to terms with your death.
Another option is Critical Illness Cover. This is a policy that is designed to pay out if you are diagnosed with a specific critical illness. If, for example, you are diagnosed with cancer and that type of cancer is covered by the policy, the insurer will pay out a lump sum or series of payments designed to cover your costs during the time that you are unwell. This cover needs careful consideration and structuring. Firstly to ensure that you have enough cover if you are not earning. Secondly that you are covered for all the most likely critical illnesses. Be sure to talk the policy through with an advisor first so that you understand what is and, more importantly, what isn’t covered by your policy.
Now that you have a mortgage you should also have a look at Income Protection. In many ways this is the policy that you are most likely to need as it covers you for any loss of earnings caused by illness or accident. The chances of actually dying whilst you’re still earning are quite low but the chances of having an accident or illness that cause you to take an extended period off work are reasonably high. A good income protection policy will pay out after a few months of lost earnings and can cover up to around 60% of your income. This usually lasts for the entire duration of the time that you are unable to work so it’s a good one to consider as it can give real peace of mind.
To conclude, you are only legally required to have Buildings Insurance when you have a mortgage, but when you stop to consider what you would do if anything should happen to you and how you would afford to keep a roof over your head, it really does seem wise to get at least some cover to protect you and your family.
Don’t choose an insurance policy without expert advice
Our best advice is to chat all your options through with an experienced Protection Advisor. They should be able to give you plenty of time to explain all the various options in plenty of detail so that you have absolute certainty about what you are signing up for. It would be awful to pay into a policy each month only to find that it doesn’t pay out when you come to need it. The way to avoid that is to get solid advice. So speak to your friends and family, get a recommendation and do your research. Find an advisor who has impeccable google reviews and really takes their time to get to know you when you speak to them.
The advisors at Hudson Rose have over 20 years of experience between them and work to the highest possible standards of customer care. Give them a call today to have a chat about your circumstances and let them guide you through the whole process of getting your insurance cover sorted.
