Mortgages

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Should you use a mortgage adviser?   Computer says no! Is this as far as a solution can go, advising … Continued

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It’s never easy thinking about the worst-case scenario, however, it’s important to have a level of protection in place to protect yourself and your loved ones. The Financial Conduct Authority (FCA) highlighted that 65% of the UK adult population has no form of insurance whatsoever, which is rather alarming. Among the 35% who do have some form of insurance more have critical illness insurance (10%) than income protection (4%), and it is estimated that out of 26.7 million households in the UK just 300,000 have income protection policies in place.

 

The insurance market can be a confusing one, and its vital you ensure you get the right advice and put in place something that appropriately covers your needs and not necessarily what you ‘want’. A financial adviser’s process is designed to assess your personal financial situation and then make a recommendation based on carefully carried out research to ensure any policy recommended best fits your needs and your personal circumstances. It is always best to take correct and proper financial advice before you purchase an insurance contract – you need to make sure it protects the very thing you are paying for it to protect.

 

Income protection is one of the most underused policies in the UK today, and yet has some of the most appealing and wide ranging benefits. If you do not have income protection, then consider what will happen if you were to fall ill for a long period of time, i.e. 6,12, 24 months and beyond, when you may no longer be covered by your employer sick pay scheme. According to the association of British Insurers, one million people unexpectedly find themselves unable to work because of poor health every year. These are alarmingly high numbers for a population that is woefully under insured. Your salary forms the basis of the household’s ability to pay bills and cover other costs including mortgage payments, therefore it’s so important to ensure your income is protected and secure above all else. Income protection is designed to replace part of your income, so this plan will pay out from when you are unable to work through illness until you are able to work again, retire or die.

 

Critical Illness is a very different cover and is usually more expensive as well to take out. It will pay out a lump sum on diagnosis of any of the specific illnesses covered in the policy. It is not as far ranging as Income Protection, and is usually taken out together with a life assurance policy to protect a known lump sum need such as a mortgage, or the loss of a family member who contributes towards the families income.

 

Life insurance is by far the most common and also the most cost effective plan you can take out. It only pays out on death, or earlier if diagnosed with a terminal illness, this benefit is frequently provided by your employer if you are in a pension scheme for instance, and is called death in service and normally pays out a multiple of your salary. If your employer does not provide this, then you should look to have cover in place should you have debt or a family who depend on your income to support their standard of living.

 

Mortgage protection is something we would recommend you take out as an absolute minimum, to stop the painful situation of a family inheriting huge amounts of debt at the worst possible time. Coping with a the loss of a loved one is hard enough, to then have to cope with the financial burden of a mortgage becomes even more of a nightmare. For relatively little cost compared to the cost of your mortgage payments it should be something that everyone with a mortgage provides for.

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Evolution Financial Services is a trading name of Evolution FS Ltd which is authorised and regulated by the Financial Conduct Authority (FCA).
 
We are a broker and not a lender. Your home or property could be repossessed if you don’t keep up repayments on your mortgage, or any other debt secured on it. The Financial Conduct Authority doesn’t regulate tax planning, and some forms of mortgages and loans.
 
The guidance and/or information on this website falls under the UK regulatory regime and so is restricted to consumers based in the UK.