Protection is a word that is used in many industries, and if you asked everyone what protection means to them, they would likely give very different answers. Protection as a definition, is the act of protecting or being protected from injury and harm. When it comes to mortgages, this is the biggest commitment you will ever make, and in everyday life, people will protect their mobile phone’s, their car’s, other types of gadgets, household goods, and their pets. However, the most important things in life are you, your family, and the roof over your head. There are insurance policies out there that are designed to protect you in specific scenarios. These could include:
I will provide a brief summary of the protection below:
Life insurance is a policy that is designed to pay out a lump sum in the event of one of the policyholders passing away. The lump sum is paid to the joint policyholder or trustees. This can either be used to pay off the mortgage or to support their lifestyle without you. Life insurance is a low-cost policy, as it is the last thing that is going to happen in your life. However, it does happen and can be very unexpected. The earlier in life you take out insurance in life, the better, because not only will it be at its cheapest, but it will also cover you prior to suffering any medical conditions that could increase the price further or be excluded from the policy.
Critical illness cover works in a similar way to life cover. It will pay a lump sum, but instead of death, it will be payable once you have suffered from one of a range of critical illnesses. This would include illnesses such as cancer, heart attack, stroke and many more. When suffering from a critical illness, you have just got to think about what you could realistically do in this scenario. A lot of people don’t think enough about this because the mortgage is based on both incomes, If your partner could still afford the payments, that is great, but it would likely affect their lifestyles, and additional costs such as hospital travel, additional days off, or childcare could have an even greater impact. The lump sum could put you in a position where, even though you are suffering from a severe condition, you don’t have the additional concern of what is going on with your finances.
Income protection works slightly differently from the other policies. This is designed to protect the income of the policyholder in the event that you are unable to work due to an accident or sickness. You may have sick pay through work that will be 100% of your pay for a set period of time followed by 50% of your salary for another set period, but you’ve just got to think about what would happen if you were off work for good or for a very long time, or if you have either no sick pay or limited sick pay. This is the perfect solution. Income protection will pay a certain percentage of your salary until you go back to work or reach retirement age. It usually has a deferred period, which is the amount of time you are off work before your policy kicks in and starts to pay you an income. This allows you to put a plan in place based on any savings or policies you may have that could get you by because the longer the deferred period, the cheaper the policy will be.
Family income benefit would not be a policy to cover your mortgage directly but would be more of a lifestyle benefit. If the policy holder were to die or be diagnosed with a terminal illness, it would pay out a monthly benefit amount. This may be able to be changed to a lump sum payment during the claim.
Home insurance comes in different parts. You have the buildings cover which is mandatory, but you also have the element that would protect your contents. Under standard cover, your home would be covered in the event of fire, theft, flood or storm, for example, but you can upgrade your policy to include things such as accidental damage, high-value items and more.
As with all policies, conditions and exclusions will apply. The cost of this insurance depends on several factors, such as your age, where you live and your occupation. As a result, the cost you will pay is based on your own circumstances.
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