In this post we are going to discuss people’s protection needs. Firstly, what do we mean by protection? Well, some of the most common protection policies are life, critical illness and income protection insurance and below I am going to summarise a little about each:
Life Cover: This is an insurance policy that pays out should the policy holder pass away during the policies term. It could be used to clear a mortgage balance for example, so a partner is not left with the burden of paying the mortgage by themselves.
Critical Illness Cover: This is an insurance policy that pays out a lump sum of money should you be diagnosed with a specified critical illness. The top 5 claimed on critical illness in the UK are currently; Cancer, Heart Attacks, Strokes, Multiple Sclerosis and Total and Permanent Disability. Critical illness cover can be combined with life cover to be more cost effective, although it does not need to be depending on your needs.
Income Protection – This is an insurance policy that pays out a monthly income, if you are unable to work for example, with a long-term illness. It can be tailored to your sick pay benefits so that it only pays out when you need it.
Now you have a brief idea of some of the types of protection policies out there, you may ask why do you need it? Well, consider this example for a moment:
The car worth £15,000 is insured for £30 per month.
The mobile phone worth £600 is insured for £5 per month.
The home is insured against fire or burglary for £30 per month.
That is £65 per month in total for objects we own, yet the two parents bringing in £40,000 per year into the home or £1,000,000 over a 25-year mortgage are insured for… what exactly?
Discussing your protection needs can be one of the most important things you ever do. It is also worth saying that we hope it is something you never have to claim for! The reason for this is twofold; firstly, if you do have to claim it means something serious has happened which may affect your life forever. Secondly, we insure our homes and our cars but many of us take very little time to discuss insuring our most valuable asset – ourselves.
When looking at your household situation, ask yourself the following questions:
- are there any situations that could prevent me from supporting my home and my family?
If there are, ask yourself;
- How would you cope if that situation lasted for 25 or 40 years?
We make a promise to you at Community Mortgage Services – we will not charge you for getting protection advice and we will not advise you to take out protection you do not need. We are here to give a human touch to your protection needs!