Insurance and Protection
Once you have secured your mortgage, it’s vital you ensure your investment is protected.
A condition of the mortgage itself will be that the building is insured. We would recommend you take the insurance out from the point of exchange of contracts as that is when your transaction becomes legally binding. Most owner/occupiers will extend the buildings insurance to make sure their contents are also protected against damage, loss and theft. Landlords will need to ensure they get the best possible protection for their investment property so may wish to take out a buildings insurance policy aimed specifically at buy to let properties and may include accidental and malicious damage to the property by tenants.
Most people avoid thinking about the possibility of illness, injury or loss of job. However, it does happen and any of these circumstances may affect your mortgage payments which in turn, could result in the loss of your most valuable asset – your home. Your mortgage is likely to be your biggest financial commitment and therefore it may be affected most by any sudden reduction in income. Looking at protecting your investment is a fairly straight-forward process:
A mortgage protection policy (a life insurance policy to pay out the balance of your mortgage in the event of a mortgage applicant dying, during the mortgage term) will ensure your loved ones need not worry about the cost of maintaining the mortgage payments. The mortgage will be paid off by the proceeds of the life insurance policy.
An income protection policy will provide you with a monthly income which can be tailored to suit your specific income requirements and to any existing provision made by an employer. So, if your employer will pay you in full for the first 6 months of sickness, we will only look at benefits starting after 6 months.
A critical illness policy will provide you with a lump sum of money, to help you out in times of need, in the event you are diagnosed with a qualifying critical illness. This does not need to be a terminal illness, but a sum of money may enable you to take some unpaid time off work to recover, or get a 2nd medical opinion or have your illness treated privately.
Family Income Benefit will provide your family with an annual income for a specific period of time (tailored to suit your requirements) on the death of one of the mortgage applicants. Assuming a mortgage protection policy has paid the mortgage balance, the additional income may be used to cover general household expenditure, childcare costs etc.
We look at your property purchase in a holistic way and will offer you the opportunity to protect it against unforeseen circumstances in the most cost-effective way to suit your personal and financial requirements.
Swift Mortgages offers business protection too so if you have any queries regarding key man insurance, relevant life insurance, shareholder protection or group cover then why not contact us for more information?
To give an idea of the risks of death, illness or being unable to work, why not put your details into this Risk Reality Calculator (courtesy of Liverpool Victoria). Please note that the results are for illustrative purposes only and based on average statistics.
By clicking this link you will be departing from the site of Swift Mortgages, neither Swift Mortgages nor Quilter are responsible for the accuracy of the information contained within the linked site.
There are other providers of Payment Protection Insurance (Short-Term Income Protection) and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk