Mortgage protection, income and sickness insurance

khampson

Hi, I've just taken a £65000 30 years mortgage out and then I get a phone call with someone trying to sell me mortgage protection, income and unemployed insurance and critical illness benefit and before I knew it my payments were going to shoot up over £100 a month, I declined but do I need all this cover? I am 34 and been working for the same company for 7 years and I am white healthy up to now (touch wood) I do agree I want something in place but I am unsure what I need and where to get it from, any advice would be great.

Keith

sonastin

Mostly depends on whether you have any dependents, anyone else to pay the mortgage if you got sick, what your attitude to risk is, etc.

First port of call I would suggest is your employer. Do you have any life cover, permanent health insurance cover, etc as part of your benefits package. Sometimes offered as straight benefits, sometimes as part of the pension scheme. If your employer doesn't offer anything suitable and you feel like you need cover, shop around. Make sure you understand what is covered by each policy as there is no "standard" in that industry.

kingstreet

To work out how to approach your protection needs all you have to do is take some time to consider three things. What cover do I need, what do I already have and how much is my monthly budget?

Once you've done that it should be fairly straightforward.

EG

Do I need a lump sum to pay off the mortgage if I die? Do I need extra cover to protect the family?

Do I need a lump sum to pay off the mortgage if I get a serious illness and again, do I need extra money for other things such as adaptations to my home?

Do I need something to replace my income if I can't work due to illness or disability?

Do I need something to replace my income if I lose my job by no fault of my own?

Lets say you decide you need mortgage life cover, you can take the cheapest form, decreasing cover for the amount and term of the mortgage. If you feel you need family protection cover, take away any death in service cover you might have to calculate your shortfall.

Family income benefit can provide money on a regular basis until your youngest child is 18 or 21. This will be cheaper than a lump sum policy.

I'd go and spend an hour or two with an IFA and plan this properly, so you know exactly what you need, how much you need and what it will cost. You should address your priority needs now and look at others later. Don't forget to agree your budget in advance so you know what will be affordable for you.

You will be able to agree a fee payment with the IFA, or if you prefer they will take commission on the products you buy instead.