What type of cover do I need?
This will depend on your particular circumstances and needs. A single person will have different priorities to that of a family.
The categories of cover are as follows:
- Life Insurance
- Income Protection
- Critical illness
- Family income benefit
A single person who has a mortgage but no family may not need life insurance as such. However, there are other types of protection that they will need. If, for example, he suffers an accident or suffers from a serious illness then his or her income will be seriously reduced affecting the ability to pay off your mortgage payments. If these payments are not made then you risk your property being re-possessed.
In this case, it would be advisable to seek critical illness protection and income protection. This will ensure that a lump sum payment is given in order to clear the mortgage.
On the other hand, a family will need more protection cover because thought needs to be made regarding the children who will be dependent on you. Income protection will be necessary. The most fitting types of protection in these circumstances will be life assurance, income protection, family income benefit and critical illness cover. This will ensure that your family will be given a lump sum to pay off the mortgage should one partner sadly die. A lump sum will also be given in the case one partner suffers from critical illness and replacement income in the case of critical illness and accident.
A single parent will have other pressing concerns as they will be solely responsible for their child and will want to maintain the same lifestyle for that child should anything go wrong. Again, income will need to be protected in the case of a critical illness or accident. Another important factor to think about is who would look after your child if they died. You will again want some assurance and peace of mind that they will be looked after and that there will be no debts in the background. You will need protection to cover your mortgage payments in the case of a death. You will need income in place to ensure your child can maintain their lifestyle at least up until they leave University. Income protection will be required if you are unable to work as well as continuous income to maintain the lifestyle you are used to if your illness or accident prolongs the time you are out of work.
What about if you are made redundant? You will need cover to pay off your mortgage payments if you are made redundant. As such, you are very likely to need all types of protection as your need will be greater and you will want to feel confident that you will be able to provide for your child no matter what occurs.
A retired couple will also require cover in certain circumstances despite being in receipt of pension income. A couple may still have a mortgage to pay but with a reduced income this may be difficult to pay alongside all of the other bills that will need to be paid. There will be a need for cover to be put in place in case one of person from the couple should die. This cover will mean a lump sum mortgage payment will be made. Cover should also be in place for replacement income to maintain the lifestyle of the couple and pay for the bills even after one has sadly passed away or is unable to do so due to long -term illness or accident. As such, it would be advisable to obtain life assurance, income protection and family income benefit.
The above are just a few examples and scenarios for you to consider…there will be other scenarios and that is why it is important to talk to us at an early stage so that we can provide you with as much information and advice as to which protection you will need to match your specific circumstances.