Most of us will have insured a car - as it is a legal requirement. But we also insure other things - our pets, our holidays and even our gadgets - without a second thought.
But what about our most valuable possessions? Our family, our home, our business?
Protection insurance - also known as life insurance, income protection or mortgage insurance - offers peace of mind to help protect all these things, should the worst happen.
Too many people don’t take out protection insurance and end up regretting it.
When you take out a mortgage you need to think about what would happen in the event of death or serious illness to either yourself or a member of your family.
● What would happen if you, or your partner were not able to work.
● What would happen to your home or your business if you or your partner passed away.
● How would your family cope financially? Would you be able to keep your home?
Mr A Candlish, Kent
There are several different types of protection you can take out:
This is an insurance policy that you put in place to pay out a lump sum or income (family income benefit for your family in the event of your death.
Critical illness cover pays out a tax-free lump sum if you or a loved one are diagnosed with a critical illness.
Income protection (not to be confused with payment protection policies) is also known as permanent health insurance. It pays out a regular income rather than a lump sum if you get an illness or injury that prevents you working.
Many people fail to realise the paucity of benefits available to them in the unfortunate event of the worst happening.
Our industry has been warned not to use shock tactics to try and sell financial protection to consumers, however while we don’t want to shock you we do want you to consider what would happen if you found yourself unable to pay your mortgage.
We all know somebody whose life has been severely and adversely affected by illness, either their own or that of a loved one.
In many cases, this can be avoided by a simple and cost-effective protection policy, even a simple life insurance that pays off the outstanding mortgage in a lump sum if one of you dies.
Best practice in financial planning means planning for the whole of someone’s life, not just when they are young, fit, healthy and at the peak of their earning powers.
We always recommend protection when you take out your mortgage because you don’t know what is around the corner.
Independent James provides independent advice to ensure your protection arrangements offer complete peace of mind
It is possible to have protection policies written in trust, for tax reasons. We work with tax specialists to ensure your protection arrangements are a help, not a hindrance.
If you want to read more please look at our free ‘Guide to protecting your financial plan’.
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