5 things to think about before a mortgage protection meeting
Whether you’re taking out a mortgage on your first property, or arranging a new mortgage deal for your current home, it’s the perfect time to take a fresh look at your insurance arrangements – such as life insurance, critical illness cover, and income protection.
A lot of people can find the prospect daunting, especially if they’re not familiar with the way these products work. So here’s a rundown of what you can do to get the most out of your meeting with your broker.
1: Make a note of any benefits you get through work
Some companies offer their employees various benefits through work, such as death in service. So make a note of what – if anything – your employer would pay out to your family in the event you passed away whilst working for them. It’s important to note that this cover is usually discretionary and therefore could be withdrawn, and across the lifetime of your mortgage it’s highly possible that you’ll move employers. So it’s not usually sensible to rely on death in service as your only form of life cover.
Also, make a note of your sick pay arrangements through work. In the event you were diagnosed with a long term illness, how much would your employer pay you while you’re off work, and how long for?
2: Spend some time considering what would happen if your income stopped.
Take a look at your monthly finances and any savings that you have. If your income stopped, how long would those savings tide you over? If you’re in a relationship, would your partner’s income alone be sufficient to pick up the slack? Or would removing one income from your monthly household budget spell disaster? This can be a really helpful way to determine as to whether you might want something to cover your income should you get sick, and how much you’d need to cover the shortfall.
3: Dig out your current insurance paperwork
If you have cover in place already, locate the paperwork and take some time to read it through so that you can understand what cover you’ve already taken out. Or, even better, send it to your broker ahead of your meeting so that they can check it over for you, and give you some advice on it when you meet. It’s possible that your current policies are sufficient, or might just need some minor tweaking. On the other hand, it could be that your circumstances have changed since taking the policies out, and you’re paying out for cover that you no longer need.
4: Consider your budget
Take some time to think about what you feel you could comfortably afford to pay towards an insurance policy. Whenever arranging a mortgage, I always advise my clients as a very rough guideline it’s worth setting aside at least 10% of their monthly mortgage payments to ensure that they can set up a good quality, comprehensive insurance package. Deciding on a decent, realistic budget will help your adviser to tailor the policy to your finances, as well as your needs.
5: Make some notes about your medical history
Just as a mortgage lender assesses your financial situation, an insurer will evaluate your medical history and health status. And different insurers have different criteria when it comes to pre-existing medical conditions, family history and your current health. If you have had – or currently have – any medical conditions, it’s best to make a note of these to discuss with your broker so that they can match you up with the perfect insurer for your circumstances. The things they’ll need to know include what condition you’ve had/have, date of diagnosis, any treatment received, and the names of any medication that you did or are still taking. Rest assured – your broker will treat this information with the strictest confidence, and will only ask for information that is relevant to your insurance application.
If this has got you thinking feel free to get in touch or sign up to our monthly newsletter. We’ll be happy to talk about your situation and our independent advisers offer free protection reviews with no obligation.
Helen Peel – 24th March 2023