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Are You Paying Too Much For Protection?

Are You Paying Too Much For Protection?

It is very possible to be too careful.  At the same time, the cost of not being careful enough can, literally, be ruinous.  You, therefore, need to use protection mindfully.  In particular, you need to review it regularly so that your cover is always meeting your needs.  Here are some tips to help.

Medical bills can be extremely high

Even though the UK has the NHS, it can still be worth looking at medical insurance.  This may allow you to bypass NHS waiting lists.  It can also get you access to treatments that might not be available on the NHS.  Dental insurance might also be worth considering for essentially the same reasons.

If you have pets, then any medical treatment they need will need to be funded privately.  Insurance can help a lot here.  Keep in mind, however, that insurers may decline to cover pets for conditions that are known to be a common risk for their breed.

They may also decline to cover chronic medical conditions (beyond the initial treatment).  This is another good reason to make sure you either buy a pet from a reputable source or adopt one from a shelter.

Legal bills can be crippling

One of the harsh realities of life is that it is entirely possible to be blamed for something that wasn’t your fault.  An even harsher reality is that defending yourself can be very expensive.  In fact, without insurance, it can be too expensive to be practical.

That means, any time you have legal exposure, you should definitely think seriously about covering yourself with insurance.  Drivers are required to have insurance.  Cyclists and pet owners are not but could benefit greatly from it.

Homeowners should take the issue of legal exposure particularly seriously.  Quite bluntly, if you own a home you have an asset.  More specifically, you have a valuable fixed asset that can be sold to pay compensation and/or legal costs.  That can make it worthwhile for someone to pursue a case they might otherwise have ignored.

You may need multiple policies for your home

Assuming you’re a homeowner, you’ll almost certainly need at least two home-related insurance policies.  Usually, the building itself is covered separately from its contents.  Both policies may (or may not) be issued by the same company but they will be issued and treated separately.

Buildings insurance

Buildings insurance can be more complicated than you might initially think.  For example, if you live in a flat, you would need to check your liability (if any) for communal areas.  You’d then have to make sure that this was covered by your insurance.  This might involve having a standard policy extended.

One of the key points to remember about buildings insurance is that you should insure your home for what it would cost to rebuild, not what it would cost to rebuy.  This is because you already own the land.  That often accounts for a substantial portion of the purchase price.  Insuring your home for more will increase your costs without any gain.

Another point to note is that standard buildings insurance may not cover damage you caused by accident (for example when doing DIY).  You may need to extend your policy or take out separate cover

Contents insurance

When taking out contents insurance, you need to check for categories of items that are excluded or limited.  For example, an insurer may only cover a certain quantity of cash.  They may also restrict cover on items such as jewellery and electronics unless the items you own are individually registered with them.

Home-contents policies may also not automatically cover outbuildings such as garages and sheds.  Again, you may need to extend your policy if you want to have these protected.

For building, content, and pet insurance we act as introducers only

Protecting Your Home Against Life’s Curveballs

Protecting Your Home Against Life’s Curveballs

If you own (or are thinking of buying) your own home, then you need to think about protecting it.  After all, it’s what literally protects you against the elements.  Even if you’re renting, you need to think about protecting your tenancy.  Here are some tips to help.

Always have an emergency fund

If you’re a homeowner, then your emergency fund will cover minor issues and/or insurance excesses.  If you’re a renter, then ideally, you should have enough money to cover a deposit on a similar property and moving costs to it.

In either case, you should also have enough money to cover any unexpected expenses in other areas of your life.  These might not be directly related to your housing but could impact your ability to pay your mortgage or rent.

Take insurance seriously

It’s great to have an emergency fund.  Realistically, however, the average person is not going to be able to put aside enough of an emergency fund to cover serious expenses.  As a rule of thumb, if something could create major legal or medical bills (including vet’s bills) then you should at least consider insurance for it.  For completeness, this includes human medical bills as this will give you options outside the NHS.

You should also think about serious repair bills and if there’s any way you can be exposed to third-party claims for damages.  For example, cyclists and pet owners should definitely consider taking out insurance to cover themselves for potential damage claims.

Homeowners should think about buildings insurance, potentially outbuildings insurance, possibly accidental-damage insurance and contents insurance.  Renters should look at having their own contents insurance.

Last but definitely not least, you should think about protecting your finances.  There are policies out there to assist, speak to an advisor to find the right one for your circumstances.

Insurance and employment

Your employment status may have implications for your insurance cover.  For example, some types of insurance may only be available to people in employment.

Likewise, some employers may provide some types of insurance to their employees.  For example, many employers provide death-in-service cover.  Technically, this is not life insurance, it’s relevant life insurance.  From an employee’s perspective, however, the end effect is the same.  If you die, your designated beneficiaries will receive a payout.

Be aware, however, that the insurance you receive from your employer may not be sufficient for your needs, let alone your wants.  You, therefore, need to do your own calculations and, if necessary, top it up.  Similarly, you’ll need to arrange cover for anyone who is not in employment, even if they’re not directly earning an income.

In particular, it’s vital to have suitable insurance for home-makers.  If anything happens to them, you will need to pay someone else to do what they do without payment.  You will quickly discover how expensive this can be particularly if they have caring responsibilities.

Take care of your credit record

Your credit record will be taken into account if you need to get a mortgage.  This includes remortgaging.  Many landlords will check it as part of their tenant-vetting process.  Some employers check it as part of pre-employment due diligence.

Managing your credit record doesn’t usually require a great deal of effort.  Basically, it amounts to paying all your bills in full and on time, avoiding taking on excessive debt and making sure all information held on you is complete and accurate.  You should check your credit file at least once a year to see if there are any mistakes on it.  If there are, get them corrected as quickly as possible.  Do not ignore them until you want credit.

For mortgage advice, please get in touch

What Insurance Cover Do You Need?

What Insurance Cover Do You Need?

In principle, you should have insurance cover for anything you can’t afford to lose.  Technically, you could self-insure.  Realistically, when bills could be significant, having an insurance policy is often the only practical option.  If you’re a homeowner, here are some types of insurance you should definitely consider.

Income-protection insurance

If you are in employment, check carefully to see what benefits, if any, your employer will pay if you become unable to work for any reason.  Some employers may offer generous support.  Others, however, will offer more limited support packages or will simply provide statutory sick pay.  In these cases, it could be very useful to have an additional safety net in the form of income-protection insurance.

If you’re self-employed then you’re responsible for your own pay and benefits.  You may qualify for state benefits but you may not want to rely on them.  You might also prefer to avoid the hassle of claiming them.  Income-protection insurance could protect your income against the results of illness or injury without the pain of having to deal with the Universal Credit process.

Critical-illness cover

Critical-illness cover pays out if you are diagnosed with one of a range of critical illnesses agreed upon when you took out the policy.  It can make a very useful partner for income-protection insurance.

Income protection insurance is designed to pay out due to illness or injury.  This means that it will typically pay out if you are diagnosed with a critical illness.  The main reason why it can be useful to have critical-illness cover as well is that critical illnesses can have serious financial implications.

For example, you may not simply be able to rest up at home as you would for a minor illness or injury.  Instead, you may need repeat visits to a hospital with the associated costs (e.g. travel and parking).  You might also benefit from extra help at home.  These costs will all come on top of your regular mortgage and bills.

Payment protection insurance

Payment protection insurance may still be associated with the mis-selling scandal of the 1990s.  The key point to understand, however, was that the mis-selling scandal, as its name states, relates to how PPI was sold.  PPI itself can be a very useful form of cover for people in employment, particularly if you have limited savings.

The whole point of PPI is that it covers payments on a debt (such a mortgage) if you are unable to undertake paid employment.  PPI is, therefore, only relevant to people on a PAYE wage/salary, not the self-employed.  If, however, you are a PAYE employee, PPI could give you welcome breathing space to find a new job if anything happens to your current one.

Health insurance

Health insurance will pay or help with paying for the cost of medical treatment.  Technically, it does not actually assist you with paying your regular mortgage and bills.  In practice, the quicker you can get back on your feet, the quicker you can recover your earnings power.

You can choose to rely on the NHS but having private insurance may open up other options.  For example, it could make it possible for you to choose to have your treatment at a time that suits you.  It may also pay for options that are not (currently) available on the NHS.

Specialised insurance for your assets

As a homeowner, you’ll probably already have regular buildings and contents cover.  It may, however, be worth checking to see if it would be better to have specialist cover for some of your assets.  For example, covering a bicycle under your home contents insurance might provide less meaningful protection than having specialist cycle insurance.

Life insurance

If you have dependents, then life insurance could help to make their life a lot easier in the event of your death.  If you have dependents living with you, life insurance could make the difference between your dependents being able to stay in their home and them having to move out.

For more information, please get in touch

For mortgage payment protection insurance, we act as introducers only.

There are other providers of Payment Protection Insurance [Short-Term Income Protection] and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneymadeclear.org.uk

For Specialised insurance, we act as introducers only

 

Are your children protected?

Are your children protected?

With an eventful year finally coming to a close, now seems an appropriate time for people to review their financial situation.  This is particularly important for people who have children as they need to ensure that their children will be protected, no matter what life throws at them.  Having this right insurance in place is often key to making this happen.

The basics of life insurance

Life insurance comes in two main forms, whole life and term.  Whole-life policies remain in effect indefinitely.  This means that, as long as the policyholder keeps making the payments, their heirs are guaranteed to receive a payout eventually.  Term policies are only valid for a specific period.

If the main purpose of your life insurance is to protect children in the event of your death, then term assurance may be the more practical option.  It will ensure that your children will be provided for until they are adults and hence can provide for themselves.

In addition to making sure that you have a suitable level of insurance cover, you may want to think about how the proceeds will be paid.  Putting the money into a trust would give you some level of control over how it was spent.  It would also separate the insurance payout from your main estate.  This reduces the taxable value of your estate and hence could reduce your inheritance tax bill.

Life insurance is for more than just the “breadwinner”

Both parents need life insurance, even if only one is earning an income.  The homemaking parent will be providing childcare and this most definitely has an economic value.  It may even be appropriate to extend life insurance cover to the children themselves.  The death of a child can lead to expenses for the whole family (e.g. funeral expenses) and the cost of cover is likely to be minimal.

Last but not least, if you are depending on relatives for childcare, e.g. grandparents, then it may be advisable to look at life insurance for them too.  This may be more expensive (due to their age), but you may only require a short-term policy e.g. until they go to school.

Renewing life insurance is a good opportunity to review legal documents

Making sure that your children are protected means more than just ensuring their financial wellbeing (although this is certainly a good place to start).  You’ll also need to think about who would care for them practically if you were no longer here.

It is highly advisable to document your wishes in your will so that they are both clear and legally-enforceable.  If you do not, then your children may end up in the care system until there is a legally-binding agreement on their care.  This agreement may not be what you or your family would have wanted.

On a similar note, renewing life insurance is also a good time to look at powers of attorney (both financial and medical).  This can, indirectly, help to protect your children since it can make life a lot easier for anyone trying to juggle looking after you with looking after them.

Other forms of insurance

Your death isn’t the only issue which could impact your children.  In fact, anything which impacts you/your partner, your home and even your pets can also negatively impact on them.  This means that, if at all possible, you should think through potential issues and take out insurance to protect against them.

Types of cover you may wish to consider might include Income Protection Cover, Critical Illness Cover, Payment Protection Insurance, Pet Insurance and Home and Contents Insurance.  You might also want to consider insurance for your transport, this includes bicycles as well as motor vehicles.

 The FCA does not regulate wills and power of attorney

For wills, power of attorney, pet insurance, motor insurance and payment protection insurance we act as introducers only

 

The importance of updating your protection cover

The importance of updating your protection cover

Many of us lead very busy lives.  This means it’s entirely understandable that people often just leave things “ticking over” unless there’s a reason to change them.  Often, that’s not just perfectly fine, it’s very sensible.  Sometimes, however, it’s a mistake.  With insurance, especially protection insurance.  It can be a huge mistake.

You need the right level of cover for your situation

Think of insurance as cover for life’s rainy days.  Now think about how you dress for a rainy day.  If you have to go out when it’s absolutely pouring, you’re going to want your best (and longest) waterproofs.  If, however, you’re just popping out into a light shower, an umbrella on its own might be absolutely fine.

The same principle applies to insurance.  Admittedly, you can’t change your insurance policy as quickly and easily as you can change your clothes.  You can, however, definitely change it and you should, indeed, must change it as your needs change.  The good news is that your needs are unlikely to change as quickly as the weather.

Major life events are indicators to check your protection cover

Many forms of insurance are subject to annual review.  Some forms of insurance, however, can run for two or three decades.  This is particularly likely with protection cover, especially life insurance.  Just because they can, however, it doesn’t mean that they should.  In fact, they almost certainly shouldn’t.  A person’s life can change significantly over that length of time and hence, so can the amount of cover they need.

Protection cover should be assessed at an individual level

In simple terms, if you have dependents, you need protection cover.  Even if you don’t have dependents, you may benefit from some forms of protection cover such as critical illness cover.  If you share responsibility for dependents (e.g. parents) then everyone involved in caring for the dependents should have their own protection cover.  This applies regardless of whether they are earning an income.  What’s more, everyone involved in caring for the dependents needs the right level of cover for their situation.

It is impossible to overstate the importance of making sure that each carer has the right level of cover.  The reason for this is that the level of cover each person needs may surprise you.  For example, let’s say a couple has pre-school children.  One parent goes out to work.  One parent stays at home to look after the children.

The parent who goes out to work may not need cover to replace all of their income.  The parent who stays at home to look after the children will need cover which will pay for someone else to take over their childcare responsibilities.  In fact, the home-maker may need a higher level of cover than the breadwinner due to the cost of childcare, especially during the pre-school years.

It can be useful to have protection cover for children

For the most part, children are impressively robust.  It is, however, a sad fact of life that some of them will be involved in accidents and/or become sick.  Some will even die.  For those who do recover, the road back to health can be long, arduous and expensive.  When children have their own protection cover, the extra funds can go a long way to ease the burden on parents (and other siblings).

You need to think about how you want to receive any payouts

Some forms of cover may offer protection either as a lump sum or as an income, possibly for a set period (or a combination of both).  If so, you need to decide what is right for you, or, in the case of life insurance, your heirs.  You also need to think about whether or not you want to put any life insurance payout into a trust, especially if children are involved.

For mortgage & protection advice, please contact us.

How To Get The Best Deal On Your Home Insurance

How To Get The Best Deal On Your Home Insurance

It may seem rather ironic to be thinking about home insurance just when everyone can finally get out of their home. On the other hand, most people are going to need, or at least want, to start brushing up their finances. Getting the right home insurance can be a major part of that. Here are some tips to help.

 

Give yourself time to do your research

 

Ideally, you want to start looking for a new deal 6-8 weeks before your current one expires (or you get the keys to your new home). That’s late enough that prices are going to be fairly current. It’s also early enough that you should be able to review all reasonable options before making your choice. Whatever you do, avoid just taking out insurance with your mortgage provider.

 

Give yourself time to brush up your credit record

 

There are two reasons why insurers are likely to check your credit record. The first is just as a means of verifying your identity. This is just one (more) reason to make sure that your credit record is accurate.

In particular, you need to make sure that all the contact details on your financial products point to your current home address. Also, make sure that you’re on the electoral roll.

The second is to decide if they’re going to offer you the option to pay in instalments and, if so, at what price.

 

Consider using an insurance broker

 

In simple terms, the more money you’re spending, the more you could save by using a broker to find you the best deal. This is in addition to the time you’ll save yourself. This means that there’s a lot to be said for using a broker for any major purchase, such as a mortgage.

 

Realistically, home insurance can be more of a grey area. Some people might be paying enough to justify the fees/commission. Other people might not think it was worth it. If you have a standard property, especially a starter one, and just want a basic policy, then you could probably bag at least a decent deal just by doing your own research.

 

Remember you’re covering the rebuilding cost

 

After just taking out home insurance with your mortgage provider, this must be one of the most common and costliest mistakes in home insurance. You are not covering the sales value of your home. You are covering the rebuilding cost of your home. There is generally a significant difference between the two because you will not have to repurchase the land you already own.

 

Review your excess

 

Increasing your excess can help to lower your premium. Of course, you need to be confident that you could absorb the excess if necessary. In other words, consider this as an option, just make sure that you use it cautiously, if at all.

 

See if you can pay upfront

 

If you pay your fees in instalments, then your insurer is, effectively, giving you credit. They will probably charge for this. How much they charge will generally depend partly on their approach and partly on your credit record. There are, however, usually some savings to be made if you can pay the full year upfront.

 

Make sure you know what you’re covering

 

Read the policy carefully and make sure you are 100% clear about what it covers and, by extension, what it doesn’t. In particular, make sure that any areas outside the main property have suitable cover. This could mean anything from a communal stairway in a flat to outbuildings in a house with a garden.

 

Keep in mind that home insurance can mean exactly that. In other words, it may not cover gardens and outbuildings unless you specifically request it and pay extra.

 

Please contact us for any more information

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