Amy Kadir Lonsdale Mortgages broker and member of the Lonsdale St Albans mortgage broking team reviews the need for income protection.
This is the first of a series of articles that consider why we recommend our clients annually review their protection policies.
Income protection pays out a percentage of your salary (usually around 50%) if you are can’t work due to illness or disability, so that you can continue paying your mortgage and bills.
Income Protection pays monthly tax free payments if you have been unable to work due to illness after a deferred period, usually three or six months. Income protection payments stop when you are able to return to work or when the policy ends. You can decide how long you would like your income protection cover to last.
‘When I meet clients to discuss their mortgage and offer them mortgage advice I always make sure I discuss protection policies with them. When people are taking out a mortgage, especially if they are first time buyers or self-employed it is important to explain how important income protection is if they are unable to work so they can cover the cost of their mortgage repayments.’
‘I would initially recommend all employees check if your employer offers group income protection. If they don’t and you are paying a mortgage please contact us on 01727 845500. We can assess your individual financial circumstances and offer mortgage advice that includes an income protection review. If you already have protection policies in place it is worth reviewing them annually when you have your mortgage review with a mortgage broker. Remember that the amount of income you are allowed to claim from your policy may not replace the exact amount of salary you were earning before you stopped work so you still may have to supplement the monthly income protection payment with savings to pay your mortgage. This is because some money will be taken off the state benefits you can claim and also the income you receive from the income protection policy will be tax free.’
We recommend not to cancel any existing policies prior to taking advice and having a new policy already in place.