It's more important than ever to have the right mortgage protection policy in place. Talk to Cailean today.
There are a number of mortgage protection policy options, so it’s important to seek independent advice.
At Cailean, our mortgage advisers will work with you to understand your specific requirements before searching the whole market for the most suitable mortgage and mortgage protection insurance for you.
The most basic type of life insurance is called term insurance. With term insurance, you choose the amount you want to be insured for and the period for which you want cover. If you die within the term, the policy pays out to your beneficiaries. If you don't die during the term, the policy doesn't pay out and the premiums you've paid are not returned to you.
There are two main types of term insurance to consider – level-term and decreasing-term insurance.
A level-term life insurance policy pays out a lump sum if you die within the specified term. The amount you're covered for remains level throughout the term – hence the name. The monthly or annual premiums you pay usually stay the same too.
Level-term policies can be a good option to cover an interest-only mortgage that's not covered by an endowment policy or if you need a specified amount of cover for a certain length of time.
With a decreasing-term life insurance policy, the amount you're covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgage.
Premiums are usually significantly cheaper than for level-term cover as the amount insured reduces as time goes by.
Critical illness cover
It pays out a cash lump sum if you're diagnosed with one of a number of listed critical illnesses, including some types of cancer, a heart attack or stroke, multiple sclerosis or the loss of limbs.
A critical illness policy could be used to pay for medical treatment, cover adaptations to your home (such as mobility aids, special equipment or structural changes required due to a disability) or to pay off your mortgage. In fact, it can be used for anything.
The illnesses covered and those excluded from cover vary widely between insurers, so it's vital that you take independent advice before buying a policy and carefully check the policy documentation. Pre-existing conditions tend to be excluded, but some insurers will base their cover on your personal medical history.
Types of premiums
Protection policies generally let you choose between guaranteed and reviewable premiums.
Policies with guaranteed premiums tend to be more expensive, but payments remain the same throughout the life of the policy. This means guaranteed policies can prove cheaper in the long-run.
Reviewable premiums tend to be much lower at the outset, but prices are likely to rise in the future. This means cover may become unaffordable as you get older, just as the likelihood of falling ill increases. Reviewable cover policy providers usually review premiums every five or 10 years. Changes in your health or personal circumstances do not lead to premium increases, but advances in medical technology can lead to higher premiums.
Accident, Sickness & Unemployment insurance (ASU) can also be referred to as mortgage payment protection and will provide you with an income to meet your outgoings if you are off work sick, have an accident or are made redundant. It pays out a monthly benefit to cover your mortgage and other related costs.
You may choose the amount of benefit you would like to receive, although there are some limits on the maximum amount. The premium will be a percentage of the amount of monthly benefit you would like to receive. Benefits are usually payable for a maximum of 12 months.
Income Protection/Permanent Health Insurance is an insurance policy that pays out if you're unable to work due to injury or illness.
It usually pays out until either retirement, death or your return to work, although short-term policies are available at a lower cost. It doesn’t usually pay out if you're made redundant, but will often provide 'back to work' help if you're off sick.
Income protection payouts are usually based on a percentage of your earnings: 50% to 70% is the norm. Payments are tax-free.
IP policies only pay out once a pre-agreed period has passed, generally ranging from one to 12 months after you put in a claim. The longer the 'deferral' period you choose, the lower your premiums. The default deferral period tends to be 13 or 26 weeks.
Contact us today on 0131 510 7071 or email us at email@example.com for a free initial consultation. Remember, there is absolutely no obligation on your part and no high pressure tactics on ours, just a relaxed service and expert, honest advice. And, what’s more, we never share your details with third parties for marketing purposes either.
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The guidance contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.