Believe it or not, you don’t need to have a mortgage in place to be eligible for these insurance policies. These policies are here to protect you and your family if anything should happen.
There are many things you can do to safeguard your money. For example, writing your life insurance policy or policies in trust. These are free of charge and not many people really know about them or how they work. They are not suitable for everyone but we are big believers in trusts and would be more than happy in explaining how they work and what they do so get in touch to find out more. In all honesty, you’ll be glad you did.
Many people say that these types of insurances do not pay out but our research shows most insurance companies pay out over 98% of claims in any one year. Please find below some published statistics from the providers themselves to show what percentage level they paid out on for life insurances.
- Legal & General: 98.6% of claims
- Aviva: 98.9% of claims
- Vitality: 99% of claims
Statistics provided by the insurers themselves for the claims made on life insurance only claims for the year 2016. So you see when people say “Insurance companies try to get out of paying” this actually could not be further from the truth. It’s all about setting up the policy the right way.
As you can see from above there are so many different types of policy and it is so important to get the correct one. Using Mortgage Saving Experts, we can talk through previous medical history and any worries you may have. We’ll advise you on the best options available for you. Sometimes if you see a television advert or a price comparison site offering cheap insurance premiums monthly, it is often that policy isn’t tailored for you. Have peace of mind make sure you have the right protection for your family.
TIP: When setting up a life insurance policy, mention to your adviser about putting the policy in Trust. Believe us when we say it is well worth asking. It could potentially save you tens or maybe hundreds of thousands of pounds in Inheritance Tax depending on your personal circumstances. Get in touch with Mortgage Saving Experts to find out how
What Is an Insurance Broker?
An insurance broker is someone who advises, arranges and puts in place non-investment insurance contracts such as life insurance, critical illness cover and income and family protection.
What Does An Insurance Broker Do For You?
An insurance broker will advise and arrange non-investment insurance contracts, so you ensure you are getting the right cover for you and your family should the unexpected or worst happen. They may advise you to put your insurance policy in trust to not have any potential Inheritance Tax Liability if it is relevant. They will also advise you of the correct policies to put in place and then follow through to put those policies in place for you.
How Insurance Brokers Work?
Insurance brokers work by:
- having an initial meeting with you to see what your concerns are and what cover you are considering,
- make recommendations to you so you can discuss and decide what is most important to you to protect,
- then apply to the insurance companies for you to put in place those covers you have agreed.
How Much Do Insurance Brokers Charge?
Insurance brokers do not normally charge anything to advise and arrange your insurance policies. Mortgage Saving Experts will not charge for this service.
This is an insurance policy which is designed to pay a cash lump sum upon the death of the person insured. There are two types of cover.
- Decreasing – this is designed to cover a repayment mortgage. The amount of cover will decrease in line with your repayment mortgage. Ie. If you have a £100,000 mortgage over 25 years, after 25 years your mortgage has been repaid so if you cover £100,000 over 25 years with your life assurance then if you make a claim in 24 years you may only have a few thousand pounds covered after that time
- Level – designed to cover an interest-only mortgage. The amount covered remains the same over the term of the policy. For example, if you covered £100,000 over 25 years then if you made a claim 24 years later then you would still get £100,000 so the amount of cover remains the same.
The money gets paid normally to the surviving spouse or partner and this can be used for whatever you want so you don’t have to pay off the mortgage. These insurances do have various names such as Life assurance or Term assurance.
Whole of Life
This is a policy which pays out a cash lump sum upon death of the insured. This policy lasts for your entire life (if you keep up the payments). They also refer to this cover as funeral cover.
Critical Illness Cover
Again works in the same way as Life insurance. It pays out a cash lump sum, to you or your family, if you contract a defined critical illness. These are the most important ones because you are more than likely to contract a critical illness than die.
There are two types of policies. Decreasing and Level which are exactly the same as the life assurance policies already mentioned.
This policy covers you for accidents and sicknesses. It pays a monthly amount to you for the term of the policy. I.e. If your mortgage payment is £500 over 25 years, you can set this policy up to cover the monthly payment over the same term.
If you make a successful claim after 1 year and you are unable to work for the next 24 years then your mortgage will still need paying. This policy will pay out for the rest of the term or while you are unable to do you current job or work altogether (depending on how it is set up).
There is legislation about how much you can protect and if you have benefits or financial help may affect the claim, so knowing where you stand when you set up the policy is imperative.
Business protection works in exactly the same way as life or critical illness cover. It is designed to pay out a cash lump sum to a company if something should happen to a director or a key person within that business. The company would receive a lump sum and use the funds to either replace the key person (ie someone the business needs to keep trading) or give the remaining directors some money to “buy out” that directors shares. The remaining directors could pay the money to the family of the deceased director and potentially have enough money to hire someone else to do that directors work.
Family Income Benefit
This is a life insurance or critical illness cover which, unlike the policies above, will pay a monthly payment to you should you die or contract a specified critical illness for the duration of the policy term.
Insurances are very much a minefield in themselves. There are many types of insurances available to people, but the country is still very much under insured.
There are many types of insurance policy on the marketplace and the ones below are the most common and the list is not exhaustive
Please note that we are not advisers of tax so if you did wish to get advice on Inheritance Tax then please speak with an Inheritance Tax specialist.