What is Income Protection?

An Income Protection Policy will pay out in the event of any illness or accidents that incapacitate you to the point where you can’t work. It pays you an income while you’re unable to work due to illness, right up until you return to work. Or in some cases for a maximum of two years per claim. It really depends on the level of income protection that you take out. Full Income Protection policies are a little bit more expensive than Budget policies but will continue to pay up until your retirement age.

What is Family Income Benefit?

Family income benefit is a Life Insurance Policy. Instead of paying your family a lump sum, this will pay them an annual lump sum. It could actually replace your income. If, for example, you’re earning £30,000 per year, a Family Income Benefit Policy could continue to pay your family that £30,000 per year, to cover the loss of your income if you died.

Can you combine different policies?

Yes, you can combine different policies together, depending on your budget. For example, it’s possible to have a Life Policy that covers your mortgage balance and combine that with a Family Income Benefit that will pay whoever you left behind an income for a number of years. Then you can take an Income Protection Policy that will cover your income if you’re unable to work and a Critical Illness Policy that will give you a lump sum if you are diagnosed with a critical illness. You can combine all policies if your budget stretches that far.

It’s important to decide what’s really important to you, which is where the protection conversation comes in. We will work within a client’s budget to find them the most extensive cover that they can afford.

What about planning for Inheritance Tax?

With a Life Insurance Policy, you can create a trust form. This means that if anything were to happen to you, the policy will be held in trust so that it doesn’t get stuck in probate. We can put a policy in trust, that won’t be part of your whole estate. So your relatives won’t be liable to pay Inheritance Tax.

How much should I budget?

Budget will really depend on what you can afford and what you’d be able to continue to afford. This is an individual consideration and something we would discuss with a client alongside mortgage budgets. If you can afford to pay £500 per month on your mortgage, then we will try to get your mortgage payments at around £400 per month, to give you a little bit extra to spend on protecting your mortgage, which is really important.

This type of life cover is age based as well, so the older you are, the more expensive it will be to take one of the policies out. It’s therefore good to think about these sorts of things when you’re first getting your first house.

Speak to Mortgage Broker Services

If you have any protection related queries or questions about anything that has been discussed above, we would be happy to help you any time. Contact us today.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.