Mortgage Protection
Term Assurance cover
Protecting your dependents
This type of insurance provides protection for a mortgage or other specific liabilities upon death before a set date or alternatively, personal protection for a specific purpose. The sum assured (the amount paid on claim) does not reduce during the term of the policy. Advantages: Is the most cost effective way of providing a level sum of cover. The sum assured being paid is not subject to personal taxation. Provides protection for those who will suffer financially upon the death of the insured for example a surviving partner and / or dependent children. It can be written on the life of one person or on the lives of two or more persons (e.g. husband and wife). Premiums can usually be fixed to remain the same throughout the term of the policy. Disadvantages: The policy has no surrender value during or at the end of the term. Medical evidence (medical examination or doctors report) may be required and the cost of cover may be increased or unavailable for those in poor health. If cover is needed at the end of the term further medical evidence will be required. Poor health may mean an increased premium or cover being declined. No life cover on death once term has ended. Points of Interest: Used by those who require cover at lowest cost available. Can be set up under Trust or on what is known as a life of another basis. This ensures that for most individuals the benefits are in the right hands at the right time. Arrangements that include critical illness can be considered. This will pay out the sum assured if the life assured has a terminal illness with a predetermined number of months to live. When arranging any protection policy through James Raynor, you will always be issued a Key Facts Document for the specific provider being recommended and the personal illustration. These documents details the specifics of the policy, the cost each month and the benefits it offers.
Mortgage Life Assurance
Decreasing Term Assurance
This type of policy is another form of Term Assurance except this time the policy pays a lump sum that decreases over the term of the policy. Most policies would guarantee to pay the balance of a Capital and Interest mortgage as long as interest rates did not rise over an amount, usually between 8-10%. All the usual additions can be added as with a Level Term Assurance policy.
Critical Illness cover
A lump sum if critically ill
This is a policy that pays a lump sum if a person is diagnosed with any one of a list of serious conditions as covered by the policy during its term. These commonly include, Cancer, Stroke, Heart Attack, Multiple Scerosis, Kidney Failure amongst many others. Examples of use are: Single people of any age including widows and widowers who may not have dependants to look after them if they were to become critically ill. Couples of any age who have mortgage and dependant responsibilities. Businesses who need to protect against the impact on the business of a key individual suffering a critical illness. Advantages: Financial support upon diagnosis of certain specified critical illnesses. The policy will pay a lump sum payment at a time when it is needed most, regardless of whether or not that illness prevents the life assured from working. The policy can be used to complement existing life cover and indeed can leave a claimant completely mortgage free. Policies can be jointly or individually owned. The sum assured is paid tax-free. Cover is available against a wide range of critical illnesses. Premiums can usually be fixed to remain the same throughout the term of the policy. Disadvantages: Due to the increased risk covered, premiums can be expensive compared to conventional life cover. Strict medical underwriting. There is often a ceiling on the sum assured. There may be a contractual waiting period required for some of the medical conditions covered. Points of Interest: Critical illness cover should certainly always be considered, as life assurance only pays out on death. As well as critical illness, Permament Health Isurance (PHI) which provides an income should also be considered. Life cover can run alongside or be incorporated into the critical illness policy.
Permanent Health insurance
A replacement income
A policy which pays a regular and tax free regular sum of money to an insured person after a specified period for disability through sickness or accident or disability. The benefit is payable until the policyholder returns to work, dies or the policy term expires, whichever is earlier. Most Permanent Health policies will give a stream of monthly tax-free payments equivalent to between 50% and 65% of gross salary, although some companies will offer up to 75%. Premiums are dependent on the monthly income required, age, current state of health smoker status and occupation. The deferment period also affects the premium, with a shorter period resulting in higher premiums being required. Examples of Use: Individuals with dependants, the self employed, salaried employees, who will suffer a drop in their salary following disability. Suitable for protecting against lack of State Benefits. Advantages: Provides a regular income in the event of the insured being unable to work due to illness or accident. It can help to supplement a reduction in earnings on return to work, in a different and lower paid job. If the policy is effected personally, no income tax arises on payments under the policy. The policy cannot be cancelled by the life office, even if the insureds health declines and no matter how many times or for how long claims are made under the contract. Some policies provide a means to protect the level of cover and any future income payments against the effects of inflation. Policies provide a choice of waiting periods, which are reflected in the premium rates. Premiums can usually be fixed to remain the same throughout the term of the policy. Disadvantages: Medical evidence is required for the Life Company. Cover may be more expensive or unavailable for those in poor health. Existing medical conditions may be excluded. There is a period of deferment chosen by the policyholder at the outset. There are usually restrictions applied to the level of benefits most insurers will offer, these being limited to approximately 60% of the applicants current gross earnings. This ensures that the applicant is not better off by not returning to work. There may be restrictions on working/travelling abroad. No surrender value Certain occupations may be loaded or excluded. Premiums are generally higher for a woman than for a man of the same age and occupation as statistics show that women are more likely, on average, to suffer ill health during working ages than men. Cover at the required level may be difficult for the self-employed to obtain. The relationship between benefits and earnings are tested at the time of claim. Points of Interest: No cover for self inflicted injury. Providers also use differing definitions for occupation. Own occupation or any occupation? (Seek advice from suitably qualified consultant here). Note that providers use differing definitions of disability. The fundamental feature of any PHI contract is its definition of disability. Consumers need to take professional advice to select the most appropriate plan. The maximum benefits are usually 60% of pre-disability income. Cover does vary from company to company. There is a period of time (selected by the policyholder) where you will not receive benefits whilst incapacitated.
ASU cover
An income when most needed
Accident, Sickness or Unemployment protection, or ASU as it is commonly known, is a simple and flexible insurance plan that is designed to pay your loan and mortgage repayments in the event of you been unable to work as a result of an accident, sickness, or unemployment. Cover is usually very cost effective and most policies will also allow you to choose whether you want to receive benefits for accident and sickness only, unemployment only or all three. Most policies will also have a 'deferment period' This is the time you have to wait to start receiving benefits from the ASU policy after you have become ill, had an accident or become unemployed. Again, this can vary from having no exclusion period to 30, 60 or 90 days. In some instances, this can be even longer. You should always consider this type of cover if you do not have any other means to pay your mortgage in the event of an accident, illness or sudden redundancy. These types of policy usually pay a benefit period of between 12 and 24 months. The main instances when you will not be covered are deliberate self injury, riding on a motorcycle, dangerous sports or occupations, working as a professional sports person, or any injury or condition related to normal pregnancy, stress, backache or which you had prior to your application for cover, AIDS related conditions, conditions due to drug and alcohol abuse or your criminal activity. If you have also selected unemployment cover, you will not be covered if you knew or had reason to believe you might become unemployed, if your work is seasonal or temporary or you accept voluntary unemployment. If you are on a contract or self employed you can still qualify for unemployment cover if you satisfy certain conditions which would be contained in the full policy details. A full list of exclusions will be provided with your policy.You may not be covered for any sickness which occurs during the first 60 days of your policy. Also you may not be covered for any unemployment which occurs during the first 180 days of your policy. 1 in 5 British workers have no insurance and hardly any savings to fall back on (source: Alliance & Leicester Research December 2006) Over 13,000 properties were repossessed in the second half of 2007 (source: Council of Mortgage Lending), please make sure you are not another statistic.
Food for thought
Some shocking statistics!
Mortgage Death Statistics: 1 in 4 men now aged 20 will not live to 65 Source: Swiss Re 2001 Over 1,650 people die in Britain every day Source: National Statistics Online, 11/2003 Every week 6,200 people are killed or injured in road traffic accidents Source: Office for National Statistics One in 5 adults have a mortgage with no associated life cover (2.2 million nationally) Source: Scottish Widows survey of 2,037 adults, 08/2005 Owner occupation is just under 70% in the UK and just under 80% in Ireland Source: European Mortgage Federation, European Commission, 2000 Critical Illness Statistics: More than 1 in 3 people in Britain will develop cancer at some time in their lives Source: Cancer Research UK, 11/2003 Over 270,000 people in Britain suffers a heart attack each year thats one heart attack every two minutes Source: British Heart Foundation, 11/2003 Over 55% of all Critical Illness claims are for cancer Source: GE Frankona Re Around 100,000 people each year in England and Wales suffer their first stroke thats one stroke every five minutes Source: The Stroke Association, 11/2003 A man has a one in four chance of suffering a critical illness before retirement age. For a woman it is one in five Source: ERC Frankona Re Income Protection statistics: The State will not pay your mortgage in any case if you have over £8,000 in savings, and the mortgage was taken out after 1 October 1995 Source: Redmayne Consulting, 04/2003 The maximum State Disability Living Allowance is only £97.15 per week Source: Redmayne Consulting, 04/2003 Four million people in the UK are currently claiming income support Source: Office of National Statistics Stress leads to a million claims for disability Source: Financial Times, 01/03/2004 People are 19 times more likely to be off work for more than six months due to illness or injury than they are to die before the age of 65 Source: Department for Work and Pensions Unemployment Statistics: Over 1 in 3 mortgage advances have mortgage payment protection insurance attached Source: Council of Mortgage Lender, H1 2003 1 in 20 of all those who are able to work in the Britain are unemployed Source: National Statistics Online, 11/2003 The average length of an unemployment claim has risen to 175 days in 2003 from 141 days five years earlier Source: Council of Mortgage Lender, H1 2003
Insurance glossary
What it means...
This is a simple glossary, which explains the terminology used within Life Assurance applications and Key Features Documents: Assured: A person or persons who are insured under the terms of a protection policy. Convertible Term Assurance: A term assurance plan which gives the owner the option to convert the policy to a Whole of Life contract or Endowment, without the need for medical checks. Critical Illness Insurance: A policy which pays the benefits on the diagnosis of one or more critical illnesses under the terms of the plan. Critical Illness Cover: The typical critical illness cover provided by a critical illness policy Decreasing Term Assurance: A term assurance plan designed to reduce its cover each year decreasing to nil at the end of term. Decreasing term cover is most commonly used to cover a reducing debt or repayment mortgage. Deferred Period: A period of delay prior to payment of benefits under a protection policy. Periods are normally 4, 13, 26, 52 weeks, the longer the period the cheaper the premium. Family Income Benefit (FIB): A term assurance policy which pays regular benefits on death to the end of the plan term. Income Protection Plan: A protection plan which pays a monthly benefit to replace a proportion of income lost due to illness or disability. Also know as Permanent Health Insurance (PHI). Indexation: A means to increase the premiums to a plan in order to reduce the effects of inflation. Premiums are normally increased in line with RPI (Retail Prices Index) or NAEI (National Average Earnings Index). Insurable Interest: A legally recognised interest enabling a person to insure another. The insured must be financially worse off on the death of the life assured. Joint Life Second Death: A policy which will only pay out when the last survivor of a joint life policy dies. Key Person Insurance (Key Man): Insurance against the death or disability of a person who is vital to the profitability of a business. Level Term Assurance: A life assurance policy which pays out a fixed sum on the death of the life assured within the plan term. No surrender value is accumulated. Life Assured: The person who's life is insured against death under the terms of a policy. Long Term Care (LTC): Insurance to cover the cost of caring for an individual who cannot perform a number of activities of daily living, such as dressing or washing. Paid Up Plan: A policy where contributions have ceased and any benefits accumulated are preserved. Permanent Health Insurance (PHI): Cover that provides a regular income until retirement should the insured be unable to work due to illness or disability. Renewable Term Assurance: An ordinary term assurance policy with the option to renew the plan at expiry without the need for further medical evidence. Sum Assured: The benefit payable under a life assurance policy. Surrender Value: The value of a life policy if it is cashed in before a claim due to death or maturity. Term Assurance: A life assurance policy that pays out a lump sum on the death of the life assured within the term of the plan. Terminal Illness Benefit: An option under term assurance policies, although most plans now include this benefit as standard. A policy with this option will pay out the sum assured if you suffer a terminal illness. Total Permanent Disability Cover: Pays out the benefit of a policy if you are unable to work due to illness or disability. Trust: Putting your life assurance policies in trust ensures that any proceeds paid out on death do not form part of your estate which may be liable to inheritance tax. Trustee(s): Person(s) holding and administering property or monies in a trust fund for others. Waiver of Premium Benefit: An option under a policy which continues to pay the premiums to the plan if you are unable to work due to illness or disability. Whole of Life Assurance: A life assurance policy which is for life and as such will definitely pay out on the death of the life assured.
Discounted Life Assurance premiums
We may be able to save you money
At James Raynor we re-invest some of the commissions we receive from the Insurance providers to attract lower premiums for our clients. So contact us for market leading premiums from all of the UK's largest and most reputable providers.
Don't ditch your policy
Keep your family protected
According to a recent report by American Express Insurance Services, as many as 50 per cent of British families could be planning on reducing their financial outlay wherever possible. Cutting out products such as life insurance and other insurance policies is very possible. The cost of living is soaring above salary increases, and Brits need to save money . However, cutting out essential insurance policies (for those with dependants) such as life insurance could leave consumers more vulnerable in the long run. The Head of American Express Insurance Services, Chris Rolland, reportedly said: "Life may be getting more expensive, but it is worrying that 48 per cent of Brits are planning to cut back on the policies that are designed to protect them during hard times. This may well be a false economy as people could end up paying out much more than they bargained for if something should happen."
Why protect your Mortgage?
For that peace of mind
When you agree to the terms of your Mortgage, you are agreeing to a contract that states that you MUST pay the agreed amount in full each and every month without delay, and for the period of the loan. Can you honestly know that you will not ever be faced with a dilemma that may affect your ability to pay your monthly Mortgage payment in full. What if you were sick, injured or suffered a longer term illness? What if you had a servere Leg break? What if you were made redundant, and found it difficult to find a similarly paid new job? What if one of the Mortgage contributors contratced a serious illness or worse died? These are all life affecting factors that would likely cause you to fall behind on your Mortgage. Now imagine that happening and you have a family to provide for. It's a very scary thought. The consequences of falling into arrears could be increased Mortgage payments and a very poor credit rating. This would likely prevent you from being able to obtain a competitive Mortgage or even get a new Mortgage at all! Almost certainly your Mortgage payemtns would rise in the future. With the current economic outlook poor for the near future, it would be wise to ensure that you have protected yourself or your family from events that could leave you financially unable to maintain your Mortgage payments. Call us now for a free no obligation quotation or to discuss your needs in detail.
Disclaimer
James Raynor is Authorised and Reulated by the FSA (463141). You may be charged a fee for the processing of your application and this fee and we estimate that this fee will be £195. Your Home is at risk if you do not keep up the repayments of a Mortgage or any other loan secured against it.
