3 Insurances to Protect Your Mortgage 2023

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3 Insurances to Protect Your Mortgage 20233 Insurances to Protect Your Mortgage 2023

When you take out a mortgage you are taking on a really big financial loan. This can be quite daunting and the thought of sorting out anything else at the same time can be at the bottom of your priority list.

But, you really do want to get some insurance sorted out and I’m talking more than just buildings and contents cover. 

I know the thought of paying out even more, when you have just taken on this loan won’t sound great, but there’s good reason to.

When I was little and I was getting vaccinations my mum used to say to me that it’s a little hurt now, to stop a big hurt in the future. Of course that sentiment didn’t help me at all at the time. But, it’s kind of the same here. It’s a little bit of money to stop a big financial loss in the future.

Carry on reading to find out more.

1. Life Insurance

When you speak with an adviser in the finance world one of the first things they will probably ask you about is life insurance.

It’s the most common protection insurance to get. I think it comes down to it being something that many of our parents have had and it feels like the grown up responsible thing to do. Which it is!

Life insurance can be set up so that it pays off your mortgage loan if you die. It’s one of the most straightforward insurances you can take out. There usually isn’t much debate as to whether you are dead or not, so the claims for life insurance with most insurance are often 98% and above.

The not nice part of insurance is thinking about what would happen to your loved ones, if you don’t have it. For many people the family will struggle to continue to make the mortgage repayments and it’s possible that they will need to sell the home. When their world is turned upside down after you have died, the last thing that you want is for your family to have to leave their home.

You need life insurance when you have a mortgage if you are married or have children. This is because your partner or children will inherit this debt from you when you die.

If you are single and don’t have any children, then life insurance isn’t really a top priority for you. Income Protection is.

2. Income Protection

I love this insurance. A lot of people aren’t completely aware of what income protection can do for them. 

Income protection replaces part of your monthly income if you are ill and cannot work. This can be for any reason that you are ill and your GP says that you need time off.

The beauty of this policy is that it could pay our for a couple of months, or potentially pay out for 40 years. It covers you for both things that can take you out of work for a while e.g. broken arm, pneumonia, breast cancer, right through to conditions that can potentially stop you from being able to work e.g. Parkinsons, stroke, rheumatoid arthritis.

Now, life insurance is something that helps your loved ones. Income protection is protecting them and you.

You’ve just gone through all the bother of getting a mortgage so that you have your own home. By protecting your income you can then have the peace of mind that if you are unable to work due to ill health, that your homes is safe. You will be able to pay your current mortgage repayment and bills, with the security of the monthly payout that income protection provides.

Remember as well that income protection pays out when you are not well. If you are making a claim on income protection, you really aren’t well. The payout from an income protection policy gives you the chance to focus on your health, rather than worrying about money.

3. Critical Illness Cover

When most people think of protection insurance they think of life insurance and critical illness cover. Critical illness cover is a policy that pays out a lump sum of money if you are diagnosed with a critical illness, at a severity that is determined by the insurer.

The reason that this is a popular insurance is because it pays out claims for cancer, heart attack and stroke, and these tend to be conditions that most people are worried about.

With critical illness cover you can receive a payout that wipes off your mortgage all in one go. Or you might decide to pay for some adaptations to your home, a new car, move home completely or put some money into savings. The choice is completely yours. For this kind of policy to payout you need to really but not very well at all and it helps to take care of the finances, while you focus on you. 

A lot of people see income protection and critical illness cover as either or. They are actually complimentary and in an ideal world you will have both.

Critical illness cover is a lump sum payment that can provide you significant financial support in the short-term. Income protection doesn’t give you a huge chunk of money, but it can provide you with financial security up to your retirement and help you to continue your pension contributions which are essential.

Our expert advisers will show you how each of these insurances can work for you. It is then completely up to you to pick and choose what feels right for you.

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