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Mortgages and Insurance Help

Frequently Asked Questions

Welcome to the Frequently Asked Questions (FAQ page). Below, we have tried to answer the most common questions visitors to this our Web site may have. If you find that your question is not answered on this page, please contact us.

How Can You Pay Life Insurance Cash-back - Critical Illness Cash-back?

Insurance companies price their products based on paying commission for advice even if you go direct and don't get any.

We therefore reward you for placing the application with us in the form of a rebate of some of that commission as long as you agree to our terms and conditions should the policy stop within the commission earnings period.

Commission on life and critical illness insurance is paid 'up-front' and describes the situation where a provider would pays us an amount of money based on a percentage of the first year's premiums for a regular premium contract. This sum is paid immediately on commencement, on the assumption that the policy will stay in force for a number of months/years ('the earnings period'). Should you stop paying premiums within the 'earnings period' (generally between 24 and 48 months), then the provider would ask us to repay the 'unearned' commission. You will therefore have to repay your share of this unearned commission. If you do not accept those terms than we can still pay you cashback however this will be paid at the end of each year during the earnings period.

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What Are The Different Types of Life Cover Are There?

Term Assurance

Term Assurance provides your chosen amount of cover restricted to a specific period of time usually chosen to coincide with an event such as the finish date of a mortgage or to provide protection for your family. This type of insurance provides protection only therefore at the end of the plan term the policy stops and the cover will cease. If you were to fall ill after this point, the policy will have lapsed at a time when you could be uninsurable (unless you have chosen renewable or convertible term assurance).

The main types of term assurance are:-

Level Term Assurance - the sum assured remains the same throughout the plan term (unless you have selected to have the cover increasing).

Decreasing Term Assurance - the sum assured reduces each year to coincide with a repayment mortgage.

Family Income Benefit - In the event of a claim sum assured in paid as a monthly income until the end of the plan term. (can be very tax efficient from an inheritance tax point of view).

What Options Can You Choose With Term Assurance?
You can select to have Renewable Term Assurance, which will allow you to renew the plan for the same amount of cover and duration, which will not take into account your medical history on renewal only your age. (Our quotes system cannot do this quote so if you need a quote please e-mail us on enquiries@quoteme4.co.uk or phone us on 01872 277291).

You could include Wavier of Premium. This is valuable benefit that should you be unable to work for a period of time the insurance company would pay you life assurance premiums to ensure that the cover does not lapse at a time when you may really need it.

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Critical illness insurance can also be included this could be combined with life cover (when you make a claim on either life or critical illness part of the the policy the provider pays out then cover stops) or you could select separate life and critical illness cover. This would enable you to maintain the other part of the plan until that also paid out or the cover came to an end.

The policy should be written in trust so that the proceeds of the plan are not paid into your estate in the event of death and will not therefore, suffer the delays involved in obtaining probate and also escape inheritance tax. The trust would also deal with critical illness claims to ensure that the proceeds would in that event go to the policy holder. We can supply trust forms and provide guidance on how to complete the trust forms on request.

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Whole of Life

Whole of Life Assurance, as the name suggests, can provide life cover or critical illness cover without imposing a limited term.

Their are two main types of Whole of life:-

  • Unit linked
  • Guaranteed

Unit Linked Whole of Life
On a Unit linked Whole of life your premiums are split into two parts one to provide your chosen amount of cover now and the other part is diverted into a unit-linked investment fund. The purpose of the fund is to accumulate money while the cost of cover is low to help subsidise the cost of cover as you get older. A unit-linked plan allows the premiums to be kept lower as they are based on the expectation of some future fund growth. Unit values can of course fall as well as rise.

Because part of your premium is invested within a fund you can select how much goes into accumulating funds to help support the cost as you get older.Unit linked plans offer a degree of flexibility on how much you contribute.
There is a choice between:-

Maximum cover - Most of the premium is paying for the selected amount of cover and a very tiny amount will be used to build up a fund. As a result the cost of cover will be very cheap, however on the first review will almost certainly increase substantially.

Minimum cover - You have selected a low level of cover and a high percentage of your premium will be paid into the investment. Cost will be the highest and cover the lowest.

Standard cover - basically allows the same level of life cover to be kept up throughout life, as long as the fund achieves a specified minimum annual growth rate. If this rate is not achieved you will either need to increase the premium to maintain cover or to decrease the level of cover to a sustainable level.

Whatever level of initial cover is chosen, that amount is guaranteed to be maintained for a specified term (normally 10 years). The policy should be written in trust so that the proceeds of the plan are not paid into your estate and will not therefore, suffer the delays involved in obtaining probate. They will also escape inheritance tax. We can supply trust forms and provide guidance on how to complete the trust forms on request.

Guaranteed Whole of life
Premiums are set at the outset and are guaranteed not to rise throughout the plan term. Their is no investment element therefore the plan will not acquire a surrender value.

The above paragraphs are for information only. You should seek professional advice on the most suitable type of cover for your particular circumstances, which we would be happy to provide.

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What Are The Different Types of Income Protection Can I Choose?

Mortgage Payment Protection Insurance (MPPI)

MPPI also known as Accident Sickness and Unemployment Insurance is designed to protect your mortgage payments and related costs such as life cover and buildings and contents. The amount of cover is restricted by your income and mortgage costs as typically policies will not cover more than 65% of your income or more than 130% of your mortgage related costs.

Since the government reduced the support for mortgage home owners accident sickness and unemployment policies are designed to plug the gap, between 0 and 9 months when the government will not be providing any financial support.

For mortgages arranged after Oct 1995 under current DSS regulations you would not be eligible for any mortgage interest support for a period of 9 months. And after this period if you are eligible that they will only pay the interest element of your loan up to a loan amount of £200,000. You also will not get any support if your partner works more than 16 hours per week!

The contract is therefore designed to provide you with temporary cover and will normally only pay the benefits out for a claim period of 12-months. However although you may pay for the cover for a number of years the contract automatically renews each year. Therefore if you do claim as a result of ill health once the maximum claim period has expired you may find that the provider no longer wants to renew your cover! and you may not be able due to health reasons get cover elsewhere.

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Accident Sickness or Unemployment Insurance (non mortgage related)

Accident Sickness and Unemployment Insurance cover can also be arranged to cover your income rather than your mortgage payments. Therefore you are not required to have a mortgage or loan and are free to select the amount of cover you want within the cover limits imposed by the insurance company.

In essence the policy is the same as a Mortgage Payment Protection Policy but with no requirement to link the cover amount required to any payments on any loans.

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Permanent Health Insurance (PHI)

As its name suggests Permanent health Insurance is a contract designed to provide long-term income protection up to your chosen retirement age. There is usually a waiting period which you choose at the start of the plan before benefits will be paid (4-week, 13-week, 26-week, 52-week or 104-week). Providers also limit the amount of cover you can have and is normally 50% of your annual earnings (benefits are paid tax free in a claim).

It is important that you ensure that you don't have cover which overlaps over policies and also any employer support, otherwise you are paying for cover you don't need and cannot claim.

The level of premium for the required amount of cover will depend on the type of plan and the company chosen. Some companies offer guaranteed fixed premiums, other plans reserve the right to review premium levels, whilst others offer the potential to build up a surrender value. For a slightly higher premium the option is normally available to have the level of cover automatically increased each year in order to provide protection against the effects of inflation.

Providers will also offer different disability occupation definitions, which are used when you make a claim. This is an important aspect of the plan. The most comprehensive definition is OWN OCCUPATION (claim paid if you are unable to do your own occupation). This is clearly preferable to a definition of disability that requires the inability to carry out any occupation.

Other Definitions:-

Any Suitable Occupation - A claim can be considered should you become unable to do your own occupation or any occupation to which you are suited, by training or experience. This is clearly preferable to a definition of disability that requires the inability to carry out any occupation.

What options can you choose with Permanent Health Insurance?

Waiting period(s) before you can make a claim:-
4-week, 13-week, 26-week, 52-week or 104-week

Age when policy expires:-
Age 50+

Indexed Benefits:-
In order that the level of benefits in payment are protected against the effects of inflation in the event of a claim, these should be indexed by percentage or the rate of inflation.

Indexed Cover:-
In order to provide some protection against the effects of inflation, the level of cover automatically rises by a percentage you choose per annum or by the rate of inflation.

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How Do I Compare Critical Illness Policies?

Critical illness plans are built around a core list of the most common serious conditions anyone may suffer.

Some policies will include a list of other, less common conditions, such as blindness or coma, which could also trigger a claim. some polices also cover degenerative illness such as alzheimer's and parkinson's disease. The Association of British Insurers has agreed a series of model definitions for 23 of the most common illness, the aim of which is to help consumers understand and compare critical illness plans.

That's why we only offer insurance that provide core critical illness definitions that meet or exceed the Association of British Insurers model definitions. But it's not just about having enough cover in place in terms of £'s. It's about having 'quality' cover. Cover that will pay out when you need it. That why we give you access to a comparative table so you can compare critical illness cover and also our online quotes facility so you can compare price.

What If I Have Adverse Credit Can I Still Get a Mortgage?

Maybe! lenders are more cautious and if you have recent adverse credit you are unlikely to get a mortgage unless you have a significant deposit and can provide a full explanation. We maybe able to assist you but would need more details click here and go to our adverse credit page for more information on how we can help you.

What Choices Do I Have to Repay My Mortgage?

Repayment
A repayment mortgage, where you repay to the lender on a monthly basis a mixture of capital and interest from day one and where the amount of loan outstanding gradually diminishes over the term. click here to find out more...

Interest only
An interest-only mortgage, where you’re monthly payment to the lender consists only of the interest on the loan with no element of ongoing repayment of capital. You will need to consider how you will pay this back at the end of the mortgage term by possibly using an investment product such as an endowment, pension, individual savings account. click here to find out more...

 

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