After everything you have been through, saving, searching for a property, applying for a mortgage and completing the legal process, it's time to look how you can protect your future!
By the end of this chapter you’ll understand:
✓ Why protection is an important part of home ownership
✓ The different types of protection available
✓ How each policy works
✓ The risks of having no protection in place
✓ Why protection should be reviewed as life changes
Estimated Reading Time: 12 minutes
None of us like to think about unexpected events. Illness. Accidents. Losing our income. Or not being here for the people we love. But these things can happen to anyone.
Protection isn’t about expecting the worst.
It’s about making sure that if life doesn’t go to plan, your home and your family have the support they need.
Why protection matters
When you first buy a home, your focus is naturally on the mortgage. But ask yourself this question…
If your income stopped tomorrow, how long could you continue paying your mortgage?
For some people, the answer is months. For others, it may only be a few weeks. Now ask another question.
If something happened to you, could your family afford to remain in the home without your income?
These aren’t easy questions. But they’re important ones.
Protection helps provide financial security during some of life’s most difficult moments. It allows you to focus on recovering or supporting your loved ones, rather than worrying about how the mortgage will be paid.
We all face risks…
Whether we realise it or not, we make decisions every day to reduce risk. We wear seat belts. We lock our front doors. We back up important files. None of these things guarantee that something won’t happen. But they help reduce the impact if it does.
Financial protection works in exactly the same way.
It’s not about expecting the worst.
It’s about understanding the risks we all face and deciding whether we’d like a financial safety net if life doesn’t go to plan.
Life Insurance – Life Insurance pays a lump sum if you die during the policy term.
Many people choose to use this money to repay their mortgage, helping ensure that their family can remain in their home without the financial burden of mortgage repayments. Life Insurance can also provide additional financial support for your loved ones at an incredibly difficult time.
Critical Illness Cover – Critical Illness Cover may pay a lump sum if you’re diagnosed with one of the serious medical conditions covered by your policy.
Every insurer is different, so the illnesses covered and the definitions used will vary. A payout could help you:
Income Protection – Income Protection is designed to provide a regular monthly income if you’re unable to work because of illness or injury, subject to the policy terms.
For many people, their income is their most valuable financial asset. Instead of helping after death or serious illness, Income Protection is there to help you continue meeting your financial commitments while you’re unable to earn.
Protection isn’t just for today
Life changes. You may:
As your life changes, your protection should be reviewed too. A policy that suited you when you bought your first home may not provide the right level of protection five years later. Reviewing your protection regularly helps ensure it continues to meet your needs.
Putting your policies into trust
If you arrange Life Insurance, your adviser may recommend placing the policy into trust.
This is a legal arrangement that can help ensure the money from your policy is paid to the people you’ve chosen more quickly and in line with your wishes, subject to the terms of the trust. It’s often a straightforward process, but it can make a significant difference for your loved ones.
If you’re unsure whether a trust is appropriate for you, we will be happy to explain how it works.
The best protection plan isn’t necessarily the one with the most policies. It’s the one that’s built around your life.
Everyone’s circumstances are different. That’s why protection should always be based on your needs, your family and your budget, not a one-size-fits-all solution.
A few weeks after moving into their first home, Alex and Sophie met with a protection adviser.
Initially, they weren’t sure if they needed any protection at all. After talking through their finances, they realised that without Alex’s income, keeping up with the mortgage would be extremely difficult.
They decided to arrange protection that suited their circumstances. They hoped they would never need it, but knowing it was there gave them real peace of mind.
✓ Why protection is an important part of home ownership.
✓ The purpose of Life Insurance, Critical Illness Cover, Income Protection
✓ Why protection should be tailored to your own circumstances.
✓ Why reviewing your protection regularly is important.
✓ How protection can help provide peace of mind for you and your family.
