INSURANCE
THE RIGHT MONEY AT THE WRONG TIME
INSURANCE AND PROTECTION OPTIONS
Mortgage Payment Protection Insurance (MPPI)
Payment protection insurance will pay out a sum of money to help cover your monthly repayments, it covers your monthly mortgage repayments for a set period of time. The maximum number of monthly repayments that the insurance company will make is usually 12, but it can sometimes be 24.
The reason for the claim could be because you have an accident or sickness, or become unemployed through no fault of your own, or if you die.
This means that the insurance company will pay the monthly repayments (or a percentage of them) on your behalf for a fixed period of time if you make a claim. It is sometimes known as ASU (accident, sickness and unemployment) insurance.
MPPI is not the only product designed to protect against loss of income, and may not always be the most appropriate. Although this can provide worthwhile cover against unexpected changes in your personal circumstances, you should bear in mind its limitations and exclusions, and possible alternative/additional products (such as income protection).
Life and/or Critial Illness Insurance
No one ever plans to get sick or die unexpectedly. We always think that it won’t happen to us, but the reality is that it could happen at any time. It’s not a fun subject to think about, but it has to be considered if you’re taking on a mortgage, or increasing your mortgage, as it’s such a life changing commitment.
Mortgage, life & Critical illness insurance policies have one clear objective – to help pay off an outstanding mortgage in the event of death or diagnosis of a critical illness during the policy term. This means that your loved ones could continue to live in the family home even if you’re no longer with them, without worrying how they’ll pay the mortgage.
Key Points and Tips when sourcing your Insurance:
1. Use an Independent adviser who has access to numerous providers and can provide advice on the type of policy, provider to use etc.. based on your individual circumstances. Using direct sources such as your Bank / Supermarket can be an expensive option as they may only have one provider that they are tied to.
2. Make sure you shop around and research the quality of cover the insurance policy provides as this can be very different from provider to provider. (As above a good quality adviser can usually recommend).
3. Be honest. Make sure that all questions are answered fully and truthfully, otherwise your policy might not pay-out when you need it most.
4. Discuss with your partner and/or family to understand the consequences for everyone should the worst happen. This will help you decide which insurance policies are priorities for you and your family.
Types of Insurance - The Basics
When calculating the costs of your Mortgage it is always important to understand all of the associated costs and insurance certainly falls into this category. Now with more and more people trying to sell you all types of insurance from your bank to your supermarket the most important thing is to make sure you understand what it is you are paying for. Below we have explained the different types of insurance to consider and also a couple of key rules when shopping for these.
Relevant Life, Key Man and Business Protection
Relevant Life Cover is a tax-efficient life insurance policy, allowing companies to offer a tax-deductible death-in-service benefit to its employees (including salaried directors). It’s set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the person insured. The proceeds go directly to the employee’s family or financial dependants.
Buildings & Contents Insurance
Protection for your home
To ensure that your home and possessions are protected against all kinds of risks we can arrange a comprehensive buildings and contents insurance policy. For extra peace of mind, you can also add on personal possessions cover, for items that you take outside your home, such as laptops and cameras.
Payment is easy as premiums are paid monthly by Direct Debit. For anyone who needs cover for just the actual building, or its contents, we can provide separate insurance policies.
Income Protection
It replaces part of your income (tax free) if you are unable to work for a long period of time because of illness or disability, and will continue to pay out until you can return to some kind of paid work or reach retirement, whichever is sooner.
It has a waiting period before it will start to pay out. The longer you agree you’ll wait, the lower your premiums will be, so it is important you find out what income you can get from your employer, and other insurance (such as mortgage payment protection insurance) in the event of illness or disability.
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IMPORTANT! YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOUR MORTGAGE.
Discovery Mortgage Services Limited is an Appointed Representative of JLM Mortgage Network Ltd, which is authorised and regulated by the Financial Conduct Authority. Registration numbers 832392 and 300629. Further details may be found by visiting www.fca.org.uk. Discovery Mortgage Services Limited registered in England No 11761503, registered address 1 Giles Road, Wendover, Buckinghamshire HP22 5HE
Our minimum fee is £595 however we will be paid a commission by the lenders and in many cases this will cover our minimum fee. This fee is chargeable on issue of a successful mortgage offer. If you do not proceed with a mortgage that has gone to offer, the £595 fee will be charged. Under some circumstances, for more complex cases, we may need to charge a £595 fee as well as receiving commission by the lender. For highly complex cases a maximum of 1% of the mortgage could be charged as a fee. Where fees are applicable you will be fully informed before an application is submitted. No fees are charged for an application that does not complete to a mortgage offer.