Buying a property is a risking business when you will be taking out a mortgage. Failure to meet your mortgage repayments can result in the bank or other lender repossessing your home. As no one has a crystal ball to really predict the future, taking on a mortgage will always be a risk. Even if you have been employed by the same company for a decade, you cannot say for sure that they won’t go into liquidation next year. One way to downscale the risk of not being able to meet your mortgage repayment schedule is to take out an income protection plan.
Income Protection Plan : Allowing you to Meet your Repayments Every Month
There are dozens of reasons why you may run into financial difficulty one month. Perhaps you have had an accident and have been unable to work. If you have no money coming in, or less than normal, than feeding your family will be the first priority; keeping up with household bills the next. Even if you are entitled to sickness benefit, you won’t have the same income. You will have to cut back somewhere, but it should not be on your mortgage repayments.
When you take out an income protection plan, you will be able to continue to pay your bills and keep up to date with your mortgage. Most of your income should be covered, although not all of it. If you are too ill to work, you will be covered. The policy you take out will state what it classed as a severe illness or disability. For this reason, always talk to us at Mortgage Style to ensure the protection you take out will pay out if you need it. Some plans are for sickness and accidents only; others will cover redundancy too.
What if I don’t have a mortgage, can I still get income protection?
You should still look into protecting your salary, what if you were to be off work unexpectedly? How would you pay your rent, cover car payments or even pay pet insurance? Did you know that more people insure their pets than they do themselves?
When Will You Receive the Money?
There will be a deferment period, after which you will begin to receive regular payments. The deferment period can be chosen by yourself, but the shorter the period, the more expensive the plan will be. You should also be careful to check how many claims can be made. The most extensive, but also the more expensive, income protection plans allow you to make as many claims as you need.
The money you will receive will be substantially less than your normal wage, up to around 65%. One important thing to add here however is that these payments are tax-free. Income protection policies can be short or long term. A short term policy will continue to pay out for a maximum of two years after you stopped work. A long term policy will continue to pay out until the end date. This date is usually set as at retirement age, meaning that you will be covered until you can retire and draw your pension.
Lastly, it is very important to keep up to date with the payments of your policy. Failure to do so may mean that you will not be able to make a claim, regardless of how many years you have been paying into the policy.
If you wish to discuss protection, please give Mortgage Style Ltd a call on 01275 370360 or email firstname.lastname@example.org and one of our experienced advisers will be happy to discuss this with you.Tags: Income Protection Plan
Categorised in: FAQs
This post was written by Marcus Robinson