The importance of Income Protection Insurance when taking out a mortgage

When you take out a mortgage, you are taking on a significant financial obligation. It is essential to ensure that you have the financial means to meet your mortgage payments, especially if you have a family to support. Income protection insurance can provide you with the financial security you need to meet your mortgage payments, even if you are unable to work due to illness or injury.

What is Income Protection Insurance?

Income protection insurance is a type of insurance that provides you with a regular tax-free income based on your earnings if you are unable to work due to illness or injury. It is designed to help you meet your essential financial commitments, including your mortgage payments, if you are unable to work.

Why is Income Protection Insurance Important for Mortgage Holders?

There are several reasons why income protection insurance is important for mortgage holders.

Firstly, a mortgage is a significant financial commitment that can take many years to pay off. If you are unable to work due to illness or injury, it can be difficult to meet your mortgage payments. Income protection insurance can provide you with the financial security you need to meet your mortgage payments, even if you are unable to work.

Secondly, having a family to support can make it even more important to have income protection insurance. If you are the main earner in your family and you are unable to work, your family’s financial security may be at risk. Income protection insurance can help you to provide for your family, even if you are unable to work. Consider if you were out of work would the remaining household income still be enough to maintain all of your essential outgoings and your family lifestyle?

How Does Income Protection Insurance Work?

Income protection insurance works by providing you with a regular income if you are unable to work due to illness or injury. The amount of income you receive will depend on the policy you choose, but it will usually be a percentage of your gross income.

To make a claim on your income protection insurance, you will need to provide evidence that you are unable to work due to illness or injury. This will usually involve providing a medical certificate from your doctor. Once your claim has been approved and your deferred period (set with your adviser at the time you apply) has elapsed, you will receive regular payments until you are able to return to work or until the end of the policies claim period, whichever comes first.

Income protection insurance is an essential consideration for anyone taking out a mortgage. It can provide you with the financial security you need to meet your mortgage payments, even if you are unable to work due to illness or injury. It can also provide you with the peace of mind of knowing that you can provide for your family if you are unable to work.

If you would like some advice on Income Protection for you and your family you can contact us on 01284 729250 or advice@larkbridge.co.uk. Alternatively, you can book a meeting with one of our advisers using the link in the header of this website.

Published on 7th May 2023

The information contained within was correct at the time of publication but is subject to change.

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