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Types of protection and why you need them
If you had an amazing appliance in your home that pumped out lots of money for you every month, would you insure it?
We cover our cars, phones and other possessions – so it’s likely you would. Well, you do have this appliance – it’s you, and your family.
The idea of protection is to keep that money coming in if the worst were to happen. ‘Protection’ is a term that includes various different types of insurance that cover you for unexpected life events. They can reassure you that your family and lifestyle will be protected in any situation.
This page summarises the main types of protection and why you might need them.
If you can’t work due to illness or an injury, how long will your employer pay you? If you’re Self-Employed, there’s no sick pay at all – how would this loss of income impact your family?
Income protection will pay you a monthly sum to help you cover your mortgage payments, bills and other household costs if you’re unable to work. It’s a flexible product – you can design it to start paying when your employer’s sick pay reduces to the basic rate, set the amount you need, and decide how long you want it to continue.
It’s a very important product and one that we urge every client to consider carefully. It’s not a pleasant thought, but you’re more likely to need to claim on an income protection policy than your life insurance.
Life insurance is probably the best known protection product. It pays a lump sum to your partner or dependents if you were to die during the term of the policy.
There are different forms of life cover, which means you can buy the product that suits your situation best. A common approach though, is for your family to pay off the mortgage if you die.
Many people worry about getting life insurance if they have pre-existing medical conditions. In most cases, you can still get cover. It’s just a question of being honest about your medical health and exploring what the options are.
Critical illness cover
Critical illness cover pays you a lump sum if you are diagnosed with a serious illness such as cancer, heart disease, stroke or multiple sclerosis.
People sometimes think that providers seek ways to avoid paying out or that the list of conditions isn’t long enough – but the insurers we work with absolutely do pay and are there to support you when you need them.
Critical illness insurance could replace your salary, help pay for lifestyle changes or even household adaptations – it takes the pressure off, so you can focus on your treatment.
Family income benefit
This is a form of life insurance that pays a regular sum to your family if you were to pass away. Many people take this kind of policy out in addition to the lump sum you typically receive from life insurance so that your family doesn’t have to make major changes after your death. It means that their lives can continue as planned.
Again, these products are very flexible and can be tailored to your budget. You usually take them out for a set term, such as 15, 20 or 25 years.
If you run your own business, you should think carefully about what would happen if you weren’t around.
Business protection insurance helps business owners plan for the unexpected. It helps the business continue with minimal disruption even if a key employee or director dies, becomes critically ill or is seriously injured.
Business protection is available for many types of businesses including partnerships, sole traders and limited companies. You can design it around your business’ specific needs.
Typical considerations are around how business loans could be repaid, covering the costs of replacing a key person, replacing lost profits or buying business shares back from the deceased person’s estate.
How can The Mortgage Mum help?
When you make a big financial commitment like buying a home, it’s important to consider what could go wrong. It’s never an easy thing to think about, but it could make a huge difference to your family in the future.
The Mortgage Mum has a team dedicated to protection – that is how much we value this advice! This team has years of experience of arranging appropriate policies and helping clients claim on them. They can have appointments over Zoom, or telephone call and will make sure you truly understand what you are protected for!
It’s these situations that have taught us how valuable it is to invest a little time and money in looking after the people we love.