The protection market is full of products from a variety of providers all catering to specific needs. You can protect your mortgage against death, critical illness, redundancy and the loss of income from sickness or injury.
There is still a plethora of options available when it comes to protecting your income, but how do you know which is right for you?
There are policies offering a very basic level of protection, known as mortgage payment protection insurance and payment protection insurance – often sold alongside mortgages by the mortgage provider. They pay a benefit for a maximum or 12 or 24 months. Payment protection insurance provides a similar type of cover however it tends to provide a smaller monthly benefit.
Income protection insurance provides the most comprehensive level of protection against sickness and injury. It allows you to meet the costs of your mortgage repayments and other monthly commitments, normally up to 50-70% of your salary. The length of time you receive benefits for is also longer; paying regularly until you can return to work or until the policy ends, usually retirement age. Conditions of the policy will vary among providers.
Income protection also has the added flexibility of a deferment period, delaying the start date for the benefits to be paid. This would be suitable for those who would receive employer benefits, and therefore will not need their income protection benefits to pay out immediately. The longer the policy holder can afford to wait, the cheaper their premiums will be.
With the maximum benefit of around 50-70% of gross income, the benefits the policy holder is entitled to should cover both the mortgage and any other financial commitments, such as utility bills.
Income protection provides a long term solution to protecting your mortgage repayments. Not everyone will recover within 12 months of becoming ill or injured and the majority of other protection policies provide no support after these 12 months. Income protection insurance can help you maintain the standard of living you were accustomed to when you were working.
Endsleigh’s independent financial advisers are able to offer advice on the various options available to you when it comes to protecting your income. Being independent allows our advisers to search the market on your behalf as they are not tied down to any particular provider. Our advisers will establish your needs before searching the marketing to find the most competitive solution for your circumstances.
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