WHAT IS LIFE ASSURANCE?
A policy that pays out a lump sum or a monthly income to dependants in the event of your death, or in some cases upon diagnosis of a terminal or critical illness.
WHY DO YOU NEED IT?
The loss of a spouse or parent can leave dependants with additional issues to cope with other than the emotional. If you are inadequately insured, your dependants may be left with a dramatically reduced household income, which could affect their quality of life. Potentially there may be reduced opportunities for children such as the ability to pay for a university education or difficulties in maintaining mortgage payments on a reduced income.
In the event of your death, a lending institution will not write off your debt. Rather, they will continue to pursue the debt through your dependants and could, ultimately, foreclose on the loan meaning the loss of the family home.
WHAT WILL THE STATE PROVIDE?
The main benefits the State may provide are the Widowed Parent’s Allowance and Child Benefit. Depending on whether the widow(er) qualifies for Income Support, the State may or may not help with paying the mortgage interest.
The method for calculating which benefits an individual may qualify for is extremely complicated. More information is available at the Department of Work and Pensions website www.dss.gov.uk.
WHAT TYPES OF COVER ARE THERE?
Level Term Assurance – Pays out a set amount of money in the event of a successful claim. These are good for personal or family protection or to protect interest only mortgages or a debt that is not reducing
Decreasing Term Assurance – Pays out a lump sum that decreases annually as the policy term progresses. This is ideal for covering a mortgage that is on a repayment basis.
Family Income Benefit – Pays an income to those left behind that can be received monthly or annually, to replace the income that has been lost.
Critical illness - This is an optional addition to the above policies. It does not pay out upon death of the person covered but instead upon diagnosis of one of a range of specified serious illnesses such as:
- Cancer (of specified types)
- Coronary artery by-pass surgery
- Heart Attack (of specified type / severity)
- Kidney Failure
- Major Organ transplant
- Multiple Sclerosis
This is not a definitive list - many more illnesses are covered and do vary between insurer's.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
We always aim to provide a high quality service to our customers. However, if you encounter any problems and we are unable to resolve them you can take your complaint to an independant ombudsman. Our advice is covered under the Financial Ombudsman Service (http://www.financial-ombudsman.org.uk/consumer/complaints.htm). You may be able to submit a claim through the EU Online Dispute Resolution Platform (https://webgate.ec.europa.eu/odr/main/?event=main.home.show if you live outside the United Kingdom or if you prefer not to deal directly with the Financial Ombudsman Service.)
The overall cost for comparison is 8.7% APR for customers who may have their access to credit restricted.
FX Mortgages is an appointed representative of Mortgage Intelligence Ltd which is authorised and regulated by Financial Conduct Authority under number 305330 in respect of mortgage, insurance and consumer credit mediation activities only.