A: The answer to this question will depend partly on what cover you already have in place and what benefits you might be entitled to at work. However, if we assume that you have no existing cover or benefits, then you may wish to consider the following plans:-
Level Term Assurance: this is typically taken out to protect an interest only mortgage whereby your debt to the lender is not ordinarily reducing. Therefore, this type of cover provides protection that remains level throughout the term of the plan.
Decreasing Term Assurance: this is typically taken out to protect a capital repayment mortgage, whereby the cover gradually reduces over the term of the plan broadly in line with your reducing mortgage debt. This is also known as a Mortgage Protection Plan. This is usually lower cost than a Level Term policy.
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Critical Illness Cover: this can be taken out on its own or as an extension to a Term Assurance plan. It pays out the sum assured in the event of the assured person suffering an illness that is covered by the plan. As an example, this would typically be a Heart Attack, Stroke, Cancer, Loss of Limb(s), Paralysis, Loss of Sight/Hearing, Alzheimer’s, and so on. Around 40 conditions would normally be covered in most polices. However, certain policies can cover a much wider list of illnesses and can also include partial payouts for more obscure or less severe illnesses.
Accident, Sickness & Unemployment Cover: this is designed to help you meet your monthly mortgage payments and associated costs for up to 24 months if you are unable to work due to illness or accident, or being made unemployed and unable to find alternative work. The policy is renewable on each yearly anniversary.
Permanent Health Insurance: this is particularly useful if you want to protect your income over the long-term, i.e. as far as your normal retirement age. The policy replaces part of your income if you are unable to work due to long-term illness or injury. The policy cover can be increased to cater for changes to your earnings level.
Buildings & Contents Insurance: this provides cover in the event of your building and/or contents being damaged due to an insured event. This would typically be fire, flood, burglary, and malicious damage. The buildings policy will cover your building structure and any permanent fixtures, such as sanitary fixings and pipe work. The contents cover protects your contents, e.g. furniture, clothes, personal possessions, etc. This cover can usually be extended to cover personal items outside the home, such as money, jewellery, phones and portable computers. A mortgage lender will usually insist that the building is covered on completion of the purchase.
Note: this is not an exhaustive list of potential protection plans. We recommend you speak to a qualified financial adviser before taking out any protection plans.