Protection Insurance - Safeguarding Your Family's Future

When we talk about protecting our home with buildings insurance, it's second nature - maybe because our mortgage lender insists we have it! But what about protecting the people who make that house a home?

Today, we're looking at protection insurance through the eyes of Rachel (33) and Lisa (31), proud mums to two-year-old Harry.

Meet the Family

Rachel and Lisa are in the process of buying their first home together. Like many young families, they're juggling mortgage payments, childcare costs, and household bills.

While they're both working full-time, they've realised their financial security hangs on their ability to maintain their incomes.

Building a Protection Safety Net

A comprehensive protection plan acts like a seatbelt for life's journey, ensuring the family can stay in their home and maintain their lifestyle if life throws them a curveball.

Let's break down what their ￡120 monthly budget could secure:

Life Insurance: Protecting Their Family's Future

For Rachel and Lisa, life insurance serves two crucial purposes if either of them pass away:

• Clearing their mortgage to ensure the surviving partner and Harry can stay in their home
• Providing a monthly income of ￡2,000 until Harry turns 21 and is no longer financially dependent on Rachel or Lisa

Based on their ages and both in good health, this could cost approximately ￡30-35 per month.

Income Protection: Safeguarding Their Salaries

Income protection is arguably the most important cover they could have.

If either Rachel or Lisa became too ill to work and their sick pay ended, this would provide a monthly income until they could return to work or retire (whichever came sooner).

For both partners, covering 60% of their salaries after a 13-week deferred period (matching their sick pay) would cost around ￡55-60 per month.

Critical Illness Cover: Financial Breathing Space

A critical illness policy would provide a tax-free lump sum if either partner were diagnosed with a specified serious illness such as; various forms of cancer, heart disease or a stroke. This could help with:

• Adapting their home to be more accessible if their mobility was impacted
• Covering additional medical expenses or drugs not available on the NHS
• Taking extra time off work for recovery
• Paying for additional childcare

Ultimately it could take the pressure off their finances at a really uncertain, upsetting and worrying time!

With their remaining budget of ￡25-30 per month, they could secure approximately ￡30,000 of critical illness cover.

Why This Combination Works

1. Their mortgage debt is protected, ensuring Harry always has a home
2. The monthly family income benefit would help maintain Harry's lifestyle until adulthood
3. Their own incomes are protected if they're unable to work and once their sick pay stops
4. They have a financial buffer if serious illness strikes

Making It Affordable

While ￡120 per month might seem significant, it's worth considering that:

• The premiums are often less than a family mobile phone contract, or a TV Subscription!
• Policies can be adjusted over time as circumstances and needs evolve
• Some coverage is better than none - they could start with the most crucial elements and add more later

Next Steps

Every family's circumstances are different, so while this example works for Rachel and Lisa, you should speak with a qualified protection adviser to design a plan that fits your specific needs and budget.

Remember: The best time to get protection insurance is when you're young and healthy - premiums will never be lower, and you're less likely to have health conditions that could complicate your application.

Your home may be repossessed if you don't keep up with your mortgage payments.

This article doesn’t constitute advice - your situation and requirements are unique and therefore you should seek expert advice based on your own individual circumstances.

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About Me

I'm Mark Humphrey, founder and advisor at MHC Mortgage & Protection Ltd, a mortgage broker firm based in Whitstable and helping people buy their homes across the UK.

I've worked in Mortgages for over 20 years and am passionate about making the mortgage and moving process as simple and stress-free as possible.

Buying your home is a BIG DEAL and with a bit more understanding and help along the way - it really can be such a positive experience and not the stressful and anxious time that so many people dread!

Whilst it's the mortgage that helps you buy your home, it's the protection that makes sure you never lose that home, so it's an equally crucial part of the process that I help with.

Please get in touch if you have any questions or if I can be of any help at all - [email protected] | 01227 807087

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MHC Mortgage & Protection Ltd is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.

Registered in England and Wales - 12067840 – Registered address – 13 Aurum Close, Whitstable, Kent. CT5 3FN