Personal insurance policy (Source: confused.com)
In our previous two blogs, we answered the internets most common questions about the mortgage and the home buying process. Another extremely important of getting yourself financially secure and organised, is to make sure that you have the right relevant personal insurances in place. In this blog we will answer some of the most burning questions that the wonderful people of Google have searched about insurances. Let’s get started.
What Is Life Insurance?
A life insurance policy is a agreement that you have with an insurance company where you pay into it per month. In return they agree to pay out money to your beneficiaries if anything should happen to you in the future. For example, if you set up a life insurance policy for £200,000, you will pay the insurance company an agreed amount per month. If you pass away unexpectedly or from a condition covered by your insurance, the insurance company will pay your family or whoever you want to benefit from the policy either in lump sums or regular payments. Ensuring that your loved ones are financially secure after your death.
There are two types of life insurance, term assurance and whole of life policies. The main differences are that term insurance run for a fixed period of time and only pay out if you pass away during the policy term. Whereas, whole of life will cover you for your entire life. Whole of life policies are understandably often more expensive than term assured policies however, a specialist insurance advisor will carefully help you to decide on the best policy for your wants and needs.
What Is Critical Illness Cover?
Critical illness cover is a policy that is designed to support you and your family if you are diagnosed with a critical life threatening illness. Lots of different illnesses are covered by critical illness cover however cancer is the primary one that all insurers cover in some way or another. Normally these payments from the policy are expected to cover things like mortgage/rent payments and treatments. Again, your financial advisor will be able to help you choose what illnesses you want to cover with your policy and how much you want to cover.
What Is Income Protection?
Income protection policies are policies that are designed to give you a regular income for a period of time, if you find yourself unable to work and provide for your family. Normally they cover a loss of earnings due to long term illness or serious accidents that may stop you from being able to work for an extended period of time. When you are able to return to work, the payments normally stop. If you are unable to return to work at all, they will usually continue until you are due to retire.
Do I Need Insurance?
Absolutely and categorically YES! Getting yourself the correct personal insurance policies in place is probably the most important and, if you have a family you support, selfless things that you can do. Of course, it is a personal choice to arrange insurance but we will always recommend that you speak with an advisor, even if it is just to explore your potential options. Covering your income so that you and your family don’t have to worry when the next pay cheque comes in is very wise and shouldn’t be ignored without careful consideration.
How Do I Get Insurance?
Speak to an insurance advisor. That is the easiest way to find out the best policy or policies for you. Rather than going on generic insurance comparison websites or going direct to one insurance company, a financial advisor will carefully talk you through your finances, your health, your family commitments, and then compare and contrast different policies from different companies.
They will help you to arrange a manageable monthly insurance payment and a benefit sum that will ensure financial stability for everyone involved. Because we at Oportfolio arrange mortgages and personal insurance, your advisor can build your insurance applications into the mortgage application process so that everything flows smoothly alongside each other and everything is arranged under one roof.
How Much Does Insurance Cost?
That really does depend on your own specific circumstances and how many policies you take out. If you are a high earner (high net-worth) you may want to cover a larger income than most people in case you die or are unable to work because of illness or injury. You may want to take out multiple insurance policies to cover different aspects of your income if you have different income sources. All of these things will be considered and advised upon by your mortgage advisor. Policy payments per month could literally range from £20 a month to a few thousand a month depending on what you are looking to cover and how much you can comfortably afford per month.
When Will My Insurance Pay Out?
Luckily, most policies will pay out more or less immediately if your condition matches the terms of your insurance. For example, if you are diagnosed with breast cancer and your policy covers breast cancer, you need to get in touch with your financial advisor and they will make the insurer aware and you will start to receive the payments for whatever insurance you have taken out. The only reasons there may be delays to payments are if there are some discrepancies about whether or not your condition is technically covered by your policy or if the insurer needs to see something official from your doctor confirming your condition.
We can’t stress enough how important personal insurance is. It not only benefits yourself if you fall ill but helps everyone you love to ensure that they will be financially secure if anything should happen to you. If you are in need of insurance or have policies already that you want to review, please feel free to give our insurance advisors a call today to discuss your options.
