Mortgage Protection & Life cover

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What is it?

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Life insurance is the most basic type of personal insurance – it pays out if you die, it is as simple as that.

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The proceeds are paid out tax free, but could be subject to Inheritance Tax before they are passed to the beneficiaries, however you can control where the money ends up by use of trusts and this can help to mitigate such Inheritance Tax.

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It is fully medically underwritten when the policy is taken out and premiums will typically be fixed for the term of the policy.

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What is it for?

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If someone dies there will be a number of things the cash is needed for, and we will always look to tailor a solution that is specifically designed for your circumstances.

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Specifically, you need to think about:

• Clearing your mortgage

• Clearing any other debts

• Replacing your lost income (see below)

• Leaving an extra lump sum for your loved ones – e.g for education or a family legacy

• Inheritance tax

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We appreciate that money will never bring anyone back, but not having to worry about the financial strain of keeping a roof over their head is at least a starting point for the family.

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Family Income Benefit

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An often overlooked but vitally important part of protecting your family is protecting the income that is lost.

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Whilst having your debts such as your mortgage covered so they are cleared in the event of your death will reduce the family’s monthly outgoings, it is likely, that in itself, won’t be enough to balance the books if one income disappears. They still need to pay the bills, feed themselves and have Christmas, birthdays and holidays.

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That is why this particular type of policy is so useful. Most life cover pays out a one-off lump sum, but Family Income Benefit is designed to pay out a monthly sum to replace that lost income, say until your children have finished their education. It is usually paid tax free and it can be index linked to help protect against the potential rising cost of living. As it pays out over time rather than in one go it can be surprising how little it costs.