Life Insurance Facts

In recent more profitable times I have seen many clients take out mortgages without factoring in anything to protect them in the future. People were very much living in the moment, not considering the future, and simply taking each day as it came.

Those carefree times are well and truly over now, and we are all staring a very different and unstable future full in the face. It is now more than ever that we should all be considering what protection we have. With interest rates rising and falling, and some people looking at rises in their mortgage payments of as much as 100%, now more than ever you need protection against the possibility of something leaving you incapable of making those monthly payments.

So let us consider what insurance actually means. It is not the concept of insuring against something happening but insuring against the consequences of that occurrence. For example, people tend to think that with life insurance, because they are healthy they do not require it. But this is illogical because it is not now that they should be considering but further on down the line. No one is immortal and no matter how fit you are now no one knows what the future has in store. If something happens to you and you are not covered what will be the consequence of your decision. And bear in mind that if you are healthy now the premiums of a policy will be very reasonable.

So what do you need to consider? Well, first and foremost you will need to make sure your mortgage is covered if you have one. If it is a repayment mortgage you have, the cover you need is a mortgage protection plan. If you have an interest only mortgage, it is a level term plan you need. Another extremely beneficial extra you should consider is critical illness cover. This will guarantee to pay off your mortgage for you should you contract a critical illness, such as cancer. This can be extremely helpful in troubled times, and if you recover from your illness, you can still rest assured that your mortgage has been paid off anyway.

Payment protection is another factor which should also be taken into consideration. This will protect your actual mortgage payments against the eventuality of you being off sick or made redundant. Unfortunately redundancy has become more of a possibility for more of us as companies are having to make severe job cuts in order to survive. Payment protection policies tend to pay out for between 12 and 24 months, so if you have to go off sick or are made redundant, this can make the difference between keeping and losing your home.

You should also make sure that you look at life cover for your family in the event of your death. It is one thing to have your mortgage covered in the event of your death, but it is worthwhile considering the bills your family will have to go on paying after you have gone.

When you have a family to consider, the best sort of cover to take out is family income benefit. It pays out either a yearly or monthly sum, and provides a payout similar to the income you would have been earning were you still alive. The idea is to take out cover for an amount similar to that which you or your partner are earning so that you can guarantee that amount of money as an income for your family in years to come.

So now more than ever it is important to get all of your finances in order, particularly when it comes to your debts outstanding. Protecting your finances is essential, especially as it could be impossible to recover should the worst happen. With mortgages and interest rates rising, it is essential to be prepared for the worst. Of course, consult a professional financial advisor before you do anything, as their expertise could be indispensible when it comes to looking after you and yours.