PROTECTION

PROTECTION

Taking out a mortgage is one of the biggest financial commitments you will make in your life. Making sure that commitment is covered in the event of an unforeseen circumstance is important, and just as important is securing professional advice from an independent financial advisor.

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There are many ways to insure different aspects of your mortgage such as:

Types of Protection

Level Term Assurance or Indexed

Decreasing Term Assurance

Whole of Life

Family Income Benefit

Income Protection

Critical Illness Cover

Relevant Life Assurance

Key Man Assurance

Shareholder Assurance

Private Medical Insurance

Buildings and Contents Insurance

Life Insurance

Life Assurance provides a lump sum in the event of Death or terminal illness.

Life insurance provide a lump sum, paid tax free, to your dependents in the event of your death. Life insurance can also be known as term insurance and there are two main ways in which the cover can be arranged:

1. Level Term Assurance

This type of policy is where the amount of cover, which is also known as the ‘sum assured’, remains at the same level thorough the length of the policy. This type of policy is often taken out to help pay off a mortgage and is most suited to interest only mortgages, where the amount owed does not decrease over time. For applicants with families, Level Term Assurance could be a great way to provide a lump sum for your family. The way this works is if you have a repayment mortgage, as the mortgage balance decreases, the difference between the sum assured and the mortgage balance can be used for family protection. The longer term the mortgage has run, the more family protection could be available.

2. Decreasing Term Assurance

This policy pays out a cash lump sum in the event of death, but the amount of money paid out decreases over time. These policies are the cheapest way to insure your life and are a good option when taken out alongside a repayment mortgage so that the amount paid out is the same, or close to the amount left on the mortgage.

Critical Illness
Cover

This is one of the most important insurances you should consider when taking out a mortgage. 

Critical illness insurance provides you with a tax-free cash sum in the event you are diagnosed with one of a list of common defined critical illnesses. The cash sum you receive can be used however you like, but is designed to take the financial burden off you during a difficult period in your life. Critical illness, like life insurance, can be a fixed lump sum or can decrease in line with your mortgage. There are quite a few providers that offer critical illness cover so it’s important to find the right company for you. Some companies offer discounts of products and other benefits if you exercise regularly and record and upload confirmation of this on their app!

Benefits can include:

  • Free critical illness cover for your children up to your sum assured or £25,000 whichever is the least
  • Family Income Benefit
This is one of the cheapest ways for providing for your family and covers death or critical or terminal illness.
 
Family Income Benefit pays out in the event of death and or Critical Illness, but instead of a one-off lump sum of cash, it pays a regular, tax-free income until the end of the policy term. This can be a suitable option for people who would rather that their dependents receive a regular income, rather than a one-off lump sum.

Income Protection

Income protection provides an income in the event of Illness or injury.

In the event of an accident or sickness income protection insurance pays out a monthly income to cover a proportion of your salary. You can decide at the outset how many months before the policy will pay out and this is called - the deferment period, and how long it will continue to pay which is called the benefit period. This can be until you are either well enough to return to work, you reach retirement age or the policy term ends. Income protection insurance provides you with the peace of mind of a regular on-going income that can help you maintain your lifestyle should you fall ill or have an accident and are unable to work. 

Buildings and
Contents

Buildings and contents insurance protects the Building (You will have to have this as a condition of the mortgage) and contents insurance which protects your contents in the house such as fixtures and fittings, TV’s, furniture etc. Hawk Eye can arrange this cover for you whether we are arranging the mortgage for you or you want to change your existing provider.

For more information about our mortgage services, please get in touch.

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"Things to think about to protect you and your family" by Aviva

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