What cover will I need and how much will it cost?
This will depend on your own personal circumstances, but your Mortgage IQ Adviser can quickly help you calculate an appropriate level of cover by considering things like:
- Your mortgage and/or any other outstanding loans
- Your current income and household expenditure
- Any childcare needs if you or your partner were to die or suffer serious illness or injury
Clearly, the higher the level of cover you decide you need, the more it will cost. Your age, medical history and occupation are among other factors that will also have an effect. However, premiums remain extremely good value and many people are surprised at how affordable putting cover in place can be.
Writing your life insurance in trust
A Trust is a legal document that allows you to specify what will happen to your money after your death. If your Life Insurance policy is written in Trust, any pay-out will go to the Trustees who will ensure the funds are distributed to the correct beneficiaries.
A Life Insurance policy that has been written in Trust does not form part of your legal estate and is not subject to inheritance Tax, allowing more of your money to pass to your beneficiaries. Life Insurance companies also tend to pay the money out much quicker under these circumstances, making things easier financially for your beneficiaries.
Even if your partner is your beneficiary (and therefore the Life Insurance payment would be exempt from Inheritance Tax under current rules), it can be worth putting your Life Insurance in Trust to ensure payment is made as quickly as possible. Your Mortgage IQ Adviser can let you know if your Life Insurance cover should be placed in Trust and can easily arrange this for you. There’s normally no charge for this service if it’s arranged when the policy is taken out.
Keeping your cover up-to-date
You should always consider reviewing your level of Protection Insurance whenever there are significant changes in your life. Getting married or moving in with a partner, buying a home, having children or changing your job can all have an impact on your financial obligations.
Even if your circumstances don’t change significantly, it can be worth reviewing your arrangements to see if you can find a more suitable policy. Having said that, it’s important to ensure the cover of any new policy meets your needs, and that you’re aware of any benefits you may lose compared to your existing policy.
Look beyond the price
It may be tempting simply to opt for the cheapest policy available. But it is important to bear in mind that whilst many products may look the same, there can be important differences between them that can be difficult to spot. This is particularly important with Serious/Critical Illness Cover and Income Protection Insurance, where the cover available from different providers varies more significantly. Care should be taken to select a policy that is most suitable for your particular needs. Your Mortgage IQ Adviser will be able to help you make the right selection.
*Some Trusts are not regulated by the Financial Conduct Authority.