What do we mean by protection and why do I need it?

Let's be Frank- you should not be getting a mortgage if you are not going to take protection. You may not want it. But you need insurance.

This isn’t about up-selling.

This isn’t about selling things you don’t need.

This is about making sure you and your family are protected against the harsh realities of life and ensuring you can keep your home if you are unable to work or earn enough to pay the mortgage due to an illness or death.

Please bear in mind that this is not a compulsory requirement by lenders in the UK. Why? Well, mainly due to certain individuals not being able to be covered as a result of pre-existing medical conditions. That being said in our option, it should be if possible. We aren’t the only ones… in some countries, it is a mandatory requirement to have the necessary protection in place or the mortgage isn’t granted.

If you get ill, can't work and your work benefits run out you are going to be in financial trouble? What will happen to you, or your family? Do you have the correct provisions in place?

Project Example

But I don’t need cover because my family members can cover me.

This may be unrealistic and even if they are in a position to support you financially for the short term- why should they? If the worst were to happen would you want to put the financial burden of your house as well as everything else onto a family member? Protection policies would allow them to support you emotionally through your recovery and leave the finances separate.

Project Example

I’ve got enough savings to cover me.

How long did these savings take to accumulate? Why would you want to use them to replace salary when they could be used towards other things. The average cancer patient will be in recovery for 3-5 years before they make a full recovery, return to work or pass away. Are those savings going to cover everything for that long? Even so, when you do return to work, you’ve lost all of those savings and have to start again.

Project Example

It won't happen to me, I’m healthy and have no bad family history.

That may well be true. That may well be a significant package. But what happens if you don’t just break a leg and need time to recover- what happens if you are critically ill, for a long time? How long do those packages last? Experience shows us that most of these are valid for circa 6 months. What happens next? Equally, can you assure yourself that you will never change jobs? Or your employer will never change their benefits? What happens if you go to a new job, you're 10x older and the policies are potentially a lot more expensive?

Project Example

It cost too much.

Said who? It costs as much as you want it to. There are no set price lists. It’s a very bespoke product which will be tailored to you, your circumstances, your financial situation…and your budget. Many factors affect the price. The younger and healthier you are- the cheaper the policy. So here comes the cheesy line “it's never going to be as cheap as it is today”…but it’s the truth.

Project Example

Ok, so what product do I need?

The reason there are so many options is that there are so many different circumstances. They vary from person to person much like the policies. What is relevant for one person or household won't work for others. Again. Give us a call and we can work this out together.

Project Example

I’ve already got cover.

Great! Don’t cancel it once you’ve read the information on our page! Remember, some cover is better than none. That being said, we recommend you review this every time as you will find that it may now be completely out of sync with your life and finances in general. Worst case scenario is that you’ve got a great existing policy that doesn’t need to be amended. But don’t be in a position where you need to claim, didn’t review it, and it doesn’t give you what you needed. We often see existing clients with archaic polices that don’t cover a fraction of what the clients through they did. Other than this being a huge risk…it can be a waste of money paying for something that isn’t going to work for you.

If you do not pay your mortgage, your home may be repossessed. You will be unable to work due to your illness, unable to pay your mortgage and you may have no option but to sell. Even then, where will you live? Equally, If you pass away whilst having a mortgage, the property and mortgage do not automatically pass to your next of kin. It passes to the lender. They will have to sell the property to recover costs. Where will your family live? Can your surviving spouse afford a mortgage on their own?

Ultimately, Mortgage protection insurance acts a safety net to cover your monthly mortgage repayments if you can no longer afford them due to a range of circumstances. It can prevent you from having to default on your mortgage, and so avoid repossession of your home.

As with all insurance policies, conditions and exclusions will apply.

So what are the options? Please see some brief information on the most popular choices below:

Does what it says on the tin. If you die, it will pay a lump sum to your chosen beneficiary. How much it pays out depends on you and how much you decide to cover your life for. You could do it on a level basis which means it pays out a set lump sum. You could take the policy on a decreasing basis which would typically pay out however much is outstanding on your current mortgage.
The life side of the policy follows the same parameters as above. The critical illness element is the important part here. It will pay a lump sum on diagnosis, not death. The horrible reality is that at least 50% of us will be diagnosed with cancer at one point in our lives. A majority of our clients have not used the money to pay off the mortgage, but most often allow these funds to source medical treatment or general quality of life.. You can take this on a level or decreasing scale.
Income protection differs from life and life and critical illness policies as it is a long-term policy. It does not pay a lump sum but rather pays a percentage on your income every month for the long term. Typically until you return to work or retire ( end of the policy) or pass away. Income protection typically favors the self-employed as they would have no employer benefits to fall back on but is equally as beneficial to our employed clients.
Mortgage payment protection insurance (MPPI) is a form of income protection that provides cover for your mortgage payments in case you've made involuntarily redundant or find yourself unable to work due to an accident or illness.
A family income benefit is designed to pay a regular income if you die. An alternative to level term insurance, family income benefit aims to replace lost income if the person insured dies. Level term insurance pays out a one-off lump sum if the person insured dies. Family income benefit pays a monthly income instead.
Arguably, the most heart-wrenching type of cover available. But heartbreakingly common. The last thing you want to think about is one of your children becoming ill. Most policies allow you to add on children’s cover as an extra or part of the package as standard. This provides all of the same comforts as the other policies do. But most importantly, allows you to spend as much time with your child while they are healing and not worry about the bills being paid.
If you have more questions contact us here.

You could have one of the above or a combination of a few. As we have said previously, we believe there is more to life than working to pay your mortgage and protection and those beliefs still stand. Therefore, we will never advise you to take out an expensive policy and impact your quality of life.

But that quality of life needs to be maintained no matter what curve balls life throws your way.

If you are looking to just take out a protection policy rather than a mortgage and protection, please let us know as we will be able to guide you through some sensible amounts and provide you with the security will all require.

The main 4 areas of a critical illness policy claim are Cancer, heart attack, stroke, and multiple sclerosis. Therefore, Mortgage Gold supports the Forever Friends Appeal at the Royal United Hospital in Bath. This charity supports the redevelopment of the hospital, life-saving medical equipment, and ground-breaking research and sponsorships helps them to plan ahead and make long-term improvements for their patients and their families.

If you would like to provide an additional donation, their website is www.foreverfriendsappeal.co.uk/donate .

Other types of insurance

Home insurance

This is mandatory insurance, required at the exchange point of sale. We will call you every 12 months to review this with you. Home insurance provides coverage to repair or rebuild your home after events like fire, smoke, theft, vandalism, a falling tree, or damage caused by weather such as lightning, wind, or hail as well as other things.

Landlord insurance

This is similar to home insurance and tailored specifically for landlords to cover their rental properties.