Mortgage & Life Protection

A lot of lenders will only provide the mortgage if certain conditions are met. Your Prospect Mortgage adviser will notify you of any insurance conditions with your mortgage choice and can ensure these policies are put in place for you.

We work with a selected panel of insurers including some of the largest providers in the United Kingdom (e.g. Aegon, AIG, Aviva, Legal & General, LV=, Royal London, Scottish Widows, Vitality & Zurich)

In an ideal world, fully comprehensive financial protection would include Life insurance with Critical Illness cover as well as Income Protection insurance. This is because they each protect against a different major life event. What if you were diagnosed with a critical illness which meant you were unable to work again?

Why do people need financial protection?
A male and female couple aged 39 and 38 have a 76% risk of one of the following happening to either of them before they retire at age 67 being unable to work for two months or more, suffering a serious illness, or dying (source LV= Risk Reality Calculator – male smoker age 39 and female non-smoker age 38).

Having the right protection in place means that whilst your life may have just turned upside down, you can stay in your home, keep paying your bills and pay off any outstanding debts.

What does each insurance type cover me for?

Life insurance

Critical illness insurance

Type of claim PaymentOne lump sum paymentSmaller additional payments and one full payment
When would l make a claim?On death of the person insured or if they are diagnosed with a terminal illnessPayment on diagnosis of a specified condition covered in the policy conditions
Common reasons for claims being paidDeath or on diagnosis of a terminal illnessOn diagnosis of cancer, heart attack, stroke, total permanent disability and multiple sclerosis2
Examples of why a claim could be declinedMisrepresentation on the policy application form, for example stating the person insured was a non-smoker but they died of smoking related lung cancerClaims made for a condition not covered in the policy Conditions such as a customer claiming for a heart attack but medical evidence showing they had suffered an angina attack.
Can l make multiple claims?NoYes but only for the listed additional payment conditions
Policy length (time you’re covered for)The policy ends if a claim is made or the policy term endsThe policy ends when a claim is made on one of the full payment conditions, or when the policy term ends
How the claim payment could be usedTo pay any outstanding debts including a mortgage and credit cards, pay funeral costs and leave money for loved ones.To cover immediate medical costs, pay off the mortgage or other debts and make adjustments to the home (if needed)

Other key facts

Life Assurance

Mortgage Protection / Decreasing Term Assurance: This type of plan is designed to pay a lump sum if the life assured dies or is diagnosed with a terminal illness within term of the policy which could be used to part or fully pay off your mortgage. The total sum insured will decrease in line with the outstanding mortgage balance during the mortgage term.

Level Term Assurance: Level term assurance policies have a known level of cover that does not change or decrease which will be paid out in the event of death or diagnosis of terminal illness.

Family Income Benefit (FIB)

Designed for parents with children, FIB may be one of the better value protection plans on offer. Rather than delivering a lump sum should you die, it is designed to provide a regular, tax-free, monthly (or annual) payment for your dependants – from the time of the claim to the end of the plan term.

Family Income Benefit is a life insurance policy that pays an income to dependants on the death of the insured. The income is payable for the remainder of the policy term. These policies are suitable for people with young families who wish to protect against the loss of income provided by either or both parents. Family Income benefit plans can used for various reasons, for example they can form part of divorce settlements. Whilst divorcing couples can often agree on monthly maintenance payments, the consequences of death of either parent whilst their children are still dependant is often overlooked. By effecting a family income benefit policy the recipient of the maintenance payments is protected should the insured die before the children become financially independent.

It is important to note that it is sometimes only slightly more expensive to own individual plans rather than a joint life policy and is therefore much better value for money as potentially two separate policies can offer double the payout should both parties die during the policy term. The premiums can be either fixed and guaranteed from outset throughout the life of the policy or reviewable.

If you choose a Family Income Benefit Life Insurance policy your dependants will receive an annual income from the time you die to the end of the policy term. The income is normally tax free and the money from your life insurance payout can be used for whatever purpose your dependants require. Premiums can be paid monthly or annually by direct debit from your bank account.

Critical Illness Cover

In the event that you suffer a critical illness then the sum assured under the contract will become payable. Definitions of a critical illness vary between different insurers and you should review a list of which illnesses are covered within the Key Facts Document when reviewing any policy proposal.

Waiver of Premium

Sometimes known as payment protection, this option ensures that premiums continue to be paid in the event that you are unable to work as a result of an accident or sickness. This benefit commences after a specified period of absence, referred to as the deferred period. Definitions of ‘disability’ vary considerably and you should review a list of which ‘disabilities’ are covered within the Key Facts Document when reviewing any policy proposal.

Fixed Premiums vs Reviewable

Some companies offer guaranteed or fixed premiums, whilst other plans reserve the right to review premium levels on a periodic basis. There is usually a small additional charge for the advantage of a guaranteed premiums.

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