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Insurance

Read through this short guide on insurance to ensure you are getting the right cover. Speak to us, we are here to help!

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Insurance - The Basics

When calculating the costs of your Mortgage it is always important to understand all of the associated costs and insurance certainly falls into this category. Now with more and more people trying to sell you all types of insurance from your bank to your supermarket the most important thing is to make sure you understand what it is you are paying for. Below we have explained the different types of insurance to consider and also a couple of key rules when shopping for these:

Key Points & Tips when sourcing your Insurance:

1. Use an Independent adviser who has access to numerous providers and can provide advice on the type of policy, provider to use ect.. based on your individual circumstances. Using direct sources such as your Bank / Supermarket can be an expensive option as they may only have one provider that they are tied too.

2. Make sure you shop around and research the quality of cover the insurance policy provides as this can be very different from provider to provider. (As above a good quality adviser can usually recommend)

3. Be Honest. All questions you answer when applying for these policies dictate the price and more importantly any potential payout so always be honest in you answers.

4. Discuss with your partner and/or family to understand the consequences for everyone should the worst happen. This will help you decide which insurance policies are priorities for you and your family

Life and/or Critial Illness Insurance

No one ever plans to get sick or die unexpectedly. We always think that it won’t happen to us, but the reality is that it could happen at any time. It’s not a fun subject to think about, but it has to be considered if you’re taking on a mortgage, or increasing your mortgage, as it’s such a life changing commitment.

Mortgage life & Critical illness insurance policies have one clear objective – to help pay off an outstanding mortgage in the event of death or diagnosis of a critical illness during the policy term. This means that your loved ones could continue to live in the family home even if you’re no longer with them, without worrying how they’ll pay the mortgage.

Mortgage Payment Protection Insurance (MPPI)

Payment protection insurance  will pay out a sum of money to help cover your monthly repayments, it covers your monthly mortgage repayments for a set period of time. The maximum number of monthly repayments that the insurance company will make is usually 12, but it can sometimes be 24.

The reason for the claim could be because you have an accident or sickness, or become unemployed through no fault of your own, or if you die.

This means that the insurance company will pay the monthly repayments (or a percentage of them) on your behalf for a fixed period of time if you make a claim. It is sometimes known as ASU (accident, sickness and unemployment) insurance.

MPPI is not the only product designed to protect against loss of income, and may not always be the most appropriate. Although this can provide worthwhile cover against unexpected changes in your personal circumstances, you should bear in mind its limitations and exclusions, and possible alternative/additional products (such as income protection).

Income Protection

It replaces part of your income (tax free) if you are unable to work for a long period of time because of illness or disability, and will continue to pay out until you can return to some kind of paid work or reach retirement, whichever is sooner.

It has a waiting period before it will start to pay out. The longer you agree you'll wait, the lower your premiums will be, so it is important you find out what income you can get from your employer, and other insurance (such as mortgage payment protection insurance) in the event of illness or disability.

Fixed Rate Buildings Insurance

This usually pays out if your property is destroyed by fire, floods or subsidence, also damage to fixed fittings such as baths and kitchens are often included, as well as sheds, greenhouses and garages.

Your cover is based on what your home would cost to rebuild. You can check whether you have enough buildings insurance through the Building Cost Information Service (BCIS) website. It has an online tool to help you calculate the sum you should insure your building(s) for, in case your home has to be entirely rebuilt.

If you purchase a leasehold property (such as a flat in a block of flats) the freeholder may have arranged buildings insurance for the whole block, in which case you may not need your own buildings policy.

Contents Insurance

This covers the loss of or damage to the contents of your home, including your furniture, electrical goods and other items within your home, and also items you take outside, for example cameras, jewellery and briefcases. Different policies offer different levels of cover but generally you'll be covered against theft and fire, and have the option to insure against damage you may cause by accident.

Some companies have limits on the value of any one item under the general policy so you'll need to specify individual items such as expensive jewellery or camera equipment, for example. Your cover may also be affected or cancelled if you leave your home empty for a long period of time, or if you let it out.

Want to get the right insurance cover without worrying?

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Independent Mortgage People Ltd. is an Appointed Representative of JLM Mortgage Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Registration numbers 758712 and 300629. Further details may be found by visiting www.fca.org.uk. Registered Office: 6 Viewpoint Hyatt Trading Estate, Babbage Road Stevenage, Hertfordshire,SG1 2EQ. Registered Company Number 09523560, Registered in England and Wales. We typically charge a fee of £495 to be paid when you complete on a mortgage arranged by us. We will also be paid commission by the lender and the fee will be reduced by this amount. Where the commission from the lender exceeds £495 we will not charge a fee. So, in many cases, no fee will be payable.

Your home may be at risk if you do not keep up payments on a mortgage or any loan secured upon it.

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