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Personal insurance: what you need and when you need it
6:44 م |
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Personal insurance: what you need and when you need it
Buying a house, having a child or retiring? Make sure you have the right cover.
As you pop open the champagne to celebrate the birth of your child or the start of your retirement, insurance is unlikely to be front of mind. However, life-changing events are typically the time when you need protection more than ever.
The number of products on the market can be overwhelming, leaving some people confused about what cover they actually need - and what they don't.
We asked protection experts to unravel the personal insurance minefield.
'I'm buying a house with my partner'
If you're taking the plunge and buying a property with your partner, there are two main priorities from an insurance point of view: making sure the mortgage debt is cleared in the event one of you dies and being able to continue mortgage payments if either of you can't work due to long-term illness.
The debt only needs to be paid once so a joint life insurance policy tailored to the level of the mortgage and decreasing in line with the debt will be needed for the life cover. "This will be surprisingly cheap," says Peter Chadborn, director and adviser at Plan Money.
Another option is to buy two single life plans. With a joint policy, you and a partner are covered by the same plan. If you take out two single policies, they are completely separate plans meaning you can get double the cover. You can also be insured for different amounts.
Roy McLoughlin of Master Adviser says purchasing two separate policies has its benefits: "It's very difficult to break up a joint life plan if you and your partner separate. In these circumstances a lot of people just end up cancelling it."
Income protection is also a good idea for homebuyers in order to protect mortgage repayments. If your employer provides sick pay, this might not be a requirement. However, if they don't, the level of cover should be for at least your proportion of the mortgage payment and run for at least the term of the mortgage, Chadborn suggests.
Houseperson cover could also be worth considering. This is a type of income protection that covers housewives, househusbands, people who have been unemployed for at least 3 months and students.
'I'm getting married'
Unless you are buying a place together for the first time - in which case the points above are all relevant - your financial dependence upon each other is unlikely to have changed.
However, if budget permits, Chadborn suggests considering critical illness cover. This insurance provides a ‘financial cushion' should you be diagnosed with a serious illness which may not prevent you from returning to work. You may not die from it but you may want to adjust your lifestyle or not have to work so hard. The lump sum pay out from a critical illness policy will effectively buy you lifestyle choices.
The number of products on the market can be overwhelming, leaving some people confused about what cover they actually need - and what they don't.
We asked protection experts to unravel the personal insurance minefield.
'I'm buying a house with my partner'
If you're taking the plunge and buying a property with your partner, there are two main priorities from an insurance point of view: making sure the mortgage debt is cleared in the event one of you dies and being able to continue mortgage payments if either of you can't work due to long-term illness.
The debt only needs to be paid once so a joint life insurance policy tailored to the level of the mortgage and decreasing in line with the debt will be needed for the life cover. "This will be surprisingly cheap," says Peter Chadborn, director and adviser at Plan Money.
Another option is to buy two single life plans. With a joint policy, you and a partner are covered by the same plan. If you take out two single policies, they are completely separate plans meaning you can get double the cover. You can also be insured for different amounts.
Roy McLoughlin of Master Adviser says purchasing two separate policies has its benefits: "It's very difficult to break up a joint life plan if you and your partner separate. In these circumstances a lot of people just end up cancelling it."
Income protection is also a good idea for homebuyers in order to protect mortgage repayments. If your employer provides sick pay, this might not be a requirement. However, if they don't, the level of cover should be for at least your proportion of the mortgage payment and run for at least the term of the mortgage, Chadborn suggests.
Houseperson cover could also be worth considering. This is a type of income protection that covers housewives, househusbands, people who have been unemployed for at least 3 months and students.
'I'm getting married'
Unless you are buying a place together for the first time - in which case the points above are all relevant - your financial dependence upon each other is unlikely to have changed.
However, if budget permits, Chadborn suggests considering critical illness cover. This insurance provides a ‘financial cushion' should you be diagnosed with a serious illness which may not prevent you from returning to work. You may not die from it but you may want to adjust your lifestyle or not have to work so hard. The lump sum pay out from a critical illness policy will effectively buy you lifestyle choices.
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