A Word With...

In Tedworth’s new series, “A Word With”, the team sit down with experts and discusses various topics relating to the Real Estate industry as a whole.

A Word With... Adrian Anderson

Why you should seriously consider protecting your mortgage.

The mortgage of many homeowners typically represents their largest financial commitment, even more so given recent interest rate rises.

If something happened (such as the death or illness of one of the homeowners) how are you going to keep up the payments on your mortgage so that the remaining family members would be able to continue to live at the property.

The fragility of life and the challenging economy witnessed over the past few years, mean more people are considering insurance to protect their mortgage payments in the event of ill health or one of the parties of the mortgage passing away.

The three most common types of mortgage protection are:

Life Assurance

This pays out a lump sum on death or a regular lump sum which could be used to repay the mortgage in the event of death.

An excess lump sum could be used by the surviving partner/spouse to help bring up the family. Life assurance provides cash when families need it most.

It gives them comforting choices at a difficult time by providing a lump sum to pay off debts, help meet household payments or ongoing living expenses, help fund education or college etc.

Income Protection

For most of us it is our income that drives our lifestyle. Income protection is designed to assist a policyholder in the event they cannot perform their job, due to long term illness or injury. It ensures they can still make the mortgage payments and maintain their family’s lifestyle. It’s interesting that many people don’t think twice about taking out travel insurance and insuring their pets. Fewer though take out income protection but it is so important in preventing economic hardship and additional worry at a difficult time.

With this insurance, a certain percentage of your income is covered potentially up to the age a person retires depending on how it is set up.

Critical Illness Cover

The third area of protection is Critical Illness Cover. It pays out a lump sum on diagnosis of a specified critical illness. While great steps have been made in the research and recovery of cancer, stroke, heart disease and many other critical illnesses, it’s still a sobering fact that the NHS says 1 in 2 people will get cancer at some point in their life.

They also say that cardiovascular (heart disease) affects around 7 million people in the UK and is responsible for one in four premature deaths.

When people are faced with a critical illness, they certainly don’t want the additional money worries of how to pay the mortgage as they pursue the often-difficult treatment to get better.

The critical illness cover’s lump sum helps them to stay financially stable and enables them to just concentrate on their health and treatments.

How we help

We have a long track-record helping clients find the right mortgage protection. We do not charge a fee for protection cover as we are paid directly by the provider.

Many clients tell us they are surprised that the protection insurance is not as expensive or complicated as they thought it would be, and they greatly value the peace of mind it brings.

As with all our advice, we tailor the cover to suit each client’s future needs. For example, this takes into consideration any benefits that they may have with work or have already set up independently.

Summary

We often hear ‘It will never happen to me’ or ‘I will sort this out later’ or ‘I don’t need it’ when it comes to deciding whether to take out mortgage protection. But as recent years have shown everyone, the unthinkable can indeed happen.

Obviously in arranging mortgage protection, many hope they and their beneficiaries will never have to use it or make a claim. But if they do, they are then covered and are less likely to face tough financial worries at what will be a difficult time. They are protecting theirs and their loved ones’ futures.

One last thought to leave you with. When the mortgage is usually your largest financial commitment, why would you not cover it?

Get specialist advice and help

Contact our team of specialists on tel. 020 7495 6633 or email enquiries@andersonharris.co.uk