Which insurance policies can I take out with my mortgage?

Life Coverage

The life insurance pays out if you die during the term of the insurance. This can be used to pay off your mortgage so your family doesn’t have to worry about further payments.

Critical Illness Coverage

Critical Illness Cover is designed to insure you against critical illnesses that could seriously impact your ability to make a living. It should pay out if you are diagnosed with any of the critical illnesses or disabilities listed on the policy. You can then use the surrender amount to pay off your mortgage or to pay for expensive medical costs. Some policies will pay on death during the coverage period if you qualify for a claim.

Accident, sickness and unemployment coverage

The Accident, Sickness and Unemployment cover is a short-term income protection insurance. This pays you a tax-free amount per month for a maximum of 12 months if you are unable to work due to an accident or illness or if you become unemployed through no fault of your own. Policies are available that will protect you against all of these events or will only cover you against accident and illness, or just unemployment.

This type of insurance is expensive, so to reduce costs you can opt for a ‘deferred period’. In that case, you will not receive a payment for a period of time in the event of damage. This deferral can be 30, 60 or 90 days for all three types of claims. You can also get a longer grace period of 180 days for accident and illness coverage. To help you decide which deferred period is best, consider things like any savings and any sick pay you receive from your employer.

You can choose how much allowance you want to receive each month, up to 65% of your gross monthly income. Gross income is your wages before deductions for deductions such as income tax and national insurance contributions. Of course, the higher the benefit you need, the higher the cost of insurance. The coverage provided by some carriers may be limited due to individual circumstances.

For example, Accident, Sickness and Unemployment cover typically costs £4.71 per month for every £100 in monthly benefit. This is based on a 36 year old customer opting for £850 monthly Accident, Sickness and Unemployment benefits with claims paid after a 30 day deferral period.

The cost of this insurance depends on a number of factors, including your age, occupation and where you live.

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A number of companies offer short-term income protection and other products designed to protect you from loss of income.

Building insurance

This includes the structure of the home such as the roof, walls, windows and permanent fixtures.

Content insurance

This includes household contents, personal belongings and valuables in the home.