Mortgage Protection & Insurance

Mortgage protection, income protection, home insurance are broad terms for the different types of insurance that you need to consider when purchasing a property. Some sort of insurance is a must for homeowners, whether it be a first time buy, home move or buy to let property.

Buildings insurance

Home insurance

Family income benefit

Decreasing term assurance

Contents insurance

Home insurance is a term that most people are familiar with. This insurance for households and landlords must be in place in order to protect a building and its contents from a risk event.

The lender will insist that a mortgaged property is adequately insured against damage or destruction. As the property is the security for the loan, the policy must meet the lenders standards. As a property owner, it is also very important that insurance is in place.

Items that are physically attached to the property will be covered by a buildings insurance policy. This will include, fitted kitchens, fitted wardrobes, window glass and sanitary ware.

Critical illness cover

Contents insurance is usually purchased as part of a combined buildings and contents policy. If you are currently renting your property, you can buy a standalone contents policy, designed for tenants.

Mortgage protection
Mortgage protection or, decreasing term life assurance is a type of life insurance designed to pay off your mortgage if you die. The amount of cover decreases in line with your outstanding mortgage balance and your premiums remain the same for the term of the policy.

Family income benefit is a type of life insurance that provides a regular tax free income for your family if you die during the policy term. Premiums are typically lower than for standard life insurance policies that pay out a lump sum. FIB helps to cover everyday expenses and maintain a family’s financial security.

Critical illness cover is usually taken out alongside life insurance. The policy pays out a lump sum on death or earlier critical illness (as defined by the policy). This type of policy is known as level term assurance. The benefit amount remains the same for the duration of the policy. You can choose to increase your premiums so that your benefit amount increases in line with inflation.

Income protection

Statutory sick pay is £118.75 per week and would cover about 27% of a full National Living Wage. An income protection policy can be your financial safety net when you need it most especially if you are one of the one in four workers in the UK who do not receive enhanced sick pay from their employer.

Why take out a family income benefit policy?

You may want to take out a family income benefit policy if you have already protected your mortgage but want to also provide an income for your partner who earns less. Or, it may be the case that your partner would need to reduce their working hours to look after children if the worst came to the worst. It may also be used by divorcees to cover maintenance payments if they die or by couples with children to provide guardians with money to look after their children if they both died in a car crash, for example. This type of policy can also be used to provide for future expenses such as paying for driving lessons or school and university fees. FIB policies are generally more affordable than traditional life insurance policies. Family income benefit should also not be overlooked if you are renting rather than a home owner. As the policy provides an income it can be a crucial element to meeting rent and household expenses and your family remaining in the home.