Life insurance & FIB
Life insurance is the bedrock of protection to have in place for any joint mortgage debt.
In the event of either party to the mortgage dying the surviving party would receive a lump sum equal to the mortgage to repay the debt.
This is very beneficial in two ways:
1, The surviving party would not have to struggle to meet the mortgage payments (Plus bills) all by themselves or risk having to sell the property as the life insurance payment would clear the mortgage debt.
2, Even if the surviving party believes they can afford all the bills and mortgage payments – very importantly – the mortgage lender may not agree with them.
The mortgage lender potentially only was able to approve the loan based on two incomes – now one is removed permanently it is quite common the lender would ask the surviving party to either reduce the mortgage down by most likely tens/hundreds of thousands or ultimately move to have the property sold.
The good news is life insurance is by far one of the most affordable insurance to put in place and for a typically very small monthly premium you both have the knowledge that if anything was to happen the surviving party would be able to cope with the mortgage and retain the property.
Life insurance can come in two main forms, life insurance and or family income benefit. It maybe appropriate for you to just need one type or potentially both could play a key role to protecting each other.
Life insurance:
This is a lump sum insurance cover that in the event of your death an amount is paid to your nominated beneficiaries or estate. This can be placed in trust also to typically avoid any Inheritance tax falling due on the amount and to speed up the process of your loved ones receiving the payment.
Family Income Benefit:
Very similar to life insurance but instead of your family receiving a lump sum they would receive a monthly amount (income) for a set number of years if you were to die during the period of cover. This could be a suitable option if you wanted to ensure a steady income was payable to your loved ones if you’re no longer around to support them.
We have access to the top insurance company from across the UK and can help arrange and advise on the most suitable options for your circumstances.
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