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Are your Children Protected?

Are your Children Protected?

After a particularly difficult and bumpy few years and with uncertainty still on the horizon, now seems an appropriate time to review your financial situation.  This is particularly important for people with children to ensure that loved ones will be protected, no matter what life throws at them.  Having the right insurance in place is often key to making this happen.

Family life insurance protection cover Coombes & wright Hertfordshire Kent

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 ensuring that you have a suitable level of insurance coverage, 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 is 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 earns an income.  The homemaking parent provides childcare, which 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 depend 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

Ensuring your children are protected means more than just ensuring their financial well-being (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 that could impact your children.  In fact, anything which impacts you, your partner and your home can have a negative impact.  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:

  • Family Income Benefit
  • Critical Illness Cover
  • Income Protection
  • Mortgage Protection
  • Private Medical Insurance
  • Rent Protection
  • Limited Company Relevant Life Insurance

Contact Coombes & Wright, we can help you source protection cover that meets your needs.

Book your free no-obligation initial consultation

The FCA does not regulate wills and power of attorney – For wills, power of attorney, and payment protection insurance, we act as introducers only.

 

 

Are You Paying Too Much For Protection?

Are You Paying Too Much For Protection?

It is possible to be too careful.  At the same time, the cost of not being careful enough can be ruinous.  You, therefore, need to use protection mindfully.  In particular, you need to review it regularly so that your cover always meets 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, any medical treatment they need will need to be funded privately.  Insurance can help a lot here.  However, keep in mind that insurers may decline to cover pets for conditions 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 ensure 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 more brutal reality is that defending yourself can be very expensive.  In fact, without insurance, it can be too costly to be practical.

Any time you have legal exposure, you should 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 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 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 independently.

Buildings insurance

Buildings insurance can be more complicated than you might initially think.  For example, if you live in a flat, you must check your liability (if any) for communal areas.  You’d then have to make sure that your insurance covered this.  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 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.

Why use Coombes & Wright Mortgage Solutions?

Coombes & Wright Mortgage Solutions is an award-winning mortgage & protection broker providing local, flexible, friendly advice. Find out more about our protection broker service. We offer a full range of products and provide tailored solutions to fit you and your family’s specific requirements.

 

Go to our Protection page 

 

We act as introducers for building, content, and pet insurance.

 

Protection Against Life’s Curveballs

Protection Against Life’s Curveballs

If you own your own home or are considering buying your first property, you must consider protecting it.  After all, it’s what protects you against the elements.  Even if you’re renting, it is essential to think about protecting your tenancy.  Have a read of our blog with some valuable tips.

Always have an emergency fund

Your emergency fund will cover minor issues and insurance excesses if you’re a homeowner.  If you’re a renter, you should ideally 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 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 will not be able to put aside enough of an emergency fund to cover serious expenses.  As a rule of thumb, if something could create significant legal or medical bills (including vet’s bills), then you should at least consider insurance for it.  This includes human medical bills for completeness as this will give you options outside the NHS.

You should also consider 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 consider insurance to cover themselves for potential damage claims.

Homeowners should consider buildings insurance, possibly outbuildings insurance, possibly accidental-damage insurance and contents insurance.  Renters should look at having their contents insurance.

Last but not least, you should think about protecting your finances.  There are policies to assist; speak to an adviser 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 employed people.

Likewise, some employers may provide some types of insurance to their employees.  For example, many employers offer death-in-service cover.  Technically, this is not life insurance; it’s relevant life insurance.  However, the end effect is the same from an employee’s perspective.  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.  Therefore, you need to do your calculations and, if necessary, top it up.  Similarly, you’ll need to arrange cover for anyone not employed, even if they’re not directly earning an income.

In particular, it’s vital to have suitable insurance for homemakers.  If anything happens to them, you 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 considered 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.  It amounts to paying all your bills in full and on time, avoiding taking on excessive debt and ensuring all information is complete and accurate.  You should check your credit file at least once a year to see if there are any mistakes.  If there are, get them corrected as quickly as possible.  Please do not ignore them until you want credit.

Why use Coombes & Wright Mortgage Solutions?

Coombes & Wright Mortgage Solutions is an award-winning mortgage & protection broker providing local, flexible, friendly advice. We offer a full range of products and provide tailored solutions to fit you and your family’s specific requirements.

 

Learn about our Mortgage Broker service

Go to our Protection page 

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

Getting the right mortgage for your move

Getting the right mortgage for your move

Even a global pandemic couldn’t keep the UK’s housing market closed for long and now it’s very much back in business.  In fact, it’s moving into peak house-buying season.  This means that both buyers and sellers need to think about what they need to do to make their moves happen.  For most buyers, that means getting a mortgage.  In fact, it means getting the right mortgage.

Getting the right mortgage can make such a huge difference to the overall state of your finances, that it’s worth taking expert advice to get the very best match for your situation.  It may save time if you consider the following points before your appointment.

Do you want a fixed rate?

Currently, this is likely to be a major issue for many (potential) borrowers so it’s worth thinking about carefully.  The key point to understand is that the major benefit of a fixed rate is stability.  You will know exactly how much you are going to pay each month over the payment term.

There is, however, a cost to this stability.  Lenders know that they are the ones shouldering the risk of interest-rate rises and they factor this risk into the cost of their products.  In other words, a fixed-rate mortgage may end up costing you more than a competitive floating-rate product.

What’s more, fixed-rates are offered for set periods (again to mitigate risk).  This means that you need to think about what you will do once the fixed period ends.  If you simply drop onto your lender’s standard variable rate, you may well end up finding yourself getting a very poor deal for your money.  You could ask your lender to switch you to a new product.  If, however, they won’t, or you don’t like their other offers, then you’re looking at paying the more expensive rate or remortgaging with all that implies.

A note on negative interest rates

There has been some speculation in the media that the Bank of England could end up implementing negative interest rates.  This may leave borrowers wondering what it could mean for them.  The first point to note is that, at present, the issue of negative interest rates is pure speculation.  The second point to note is that, even if it does, there is absolutely no guarantee that it’s going to result in a bonanza for borrowers.

Those on a fixed rate are not going to see any change.  That’s exactly what a fixed rate means.  It doesn’t change no matter what happens.  Those on variable rates could, in theory, see themselves being paid to borrow.  In practice, however, they may find that there is a clause in their contract which says that their rate will never drop below a certain amount no matter what happens.

Obviously, borrowers are free to remortgage (assuming they meet the relevant eligibility criteria) but it’s hard to see UK lenders falling over themselves to issue mortgages which effectively cost them money.  That’s before you get into the issue of assessing affordability and thinking about how borrowers would cope when life returned to normal.

Is a traditional repayment mortgage right for you?

For many people, a traditional repayment mortgage is exactly the right way to go.  You pay off the capital and interest over the life of the mortgage and at the end of the term, you own your house outright.

There is, however, a difference between many people and everyone.  For some people, interest-only mortgages are the most sensible option, even in the residential market.  For others, offset mortgages could offer welcome flexibility in uncertain times.

Even buyers who do want a traditional repayment mortgage may prefer one with more modern options, such as the ability to take payment holidays or to drawdown equity (both within agreed limits).

Your property may be repossessed if you do not keep up repayments on your mortgage.

Equity release refers to home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration