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Our guide to making sure your home is protected

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Fri 09 Oct 2015

Our guide to making sure your home is protected

When we sit down and think about it, there are few things that could exceed the priority of having a roof over our heads. And that is why it is important that we spend time thinking about how we’d go about things should something go wrong.

 

There are several issues to consider, such as how would you cope if you or your partner was unable to work as a result of illness or through an accident. Should the unthinkable happen would you still be capable of paying your rent or mortgage? Would your family have the ability to make your repayments if you were to pass away? While these are not great circumstances to consider, there comes a time when we have to deal with them. Luckily, Howes Estates have got the information you need to help.

 

Take a look at our essential points on how to protect your property in Devon and further afield:

 

Protection insurance

 

Fortunately, there’s a vast variety of insurance policies available to you on the market capable of helping you to protect your home. Options will depend on individual circumstances.

 

Having life insurance will usually see a pay out of a lump sum if you pass away without warning. Of all the varieties of life insurance 'decreasing term' insurance is probably the most cost effective way to get cover for your mortgage should you pass away. The ‘term’ will define the amount of time until the pay-out expires on this type of policy.

 

Income protection insurance

 

·         This type of insurance is intended to pay out a fixed percentage of your salary on a monthly basis, typically tax-free, if you become too ill to work, or in the event of an accident. IPI offers a longer term form of protection and will continue to pay out until you are able to return to work, or you reach retirement.

 

·         Alternatively, you can take the short-term income protection insurance option, which pays out a previously agreed sum. Short-term IPI is on hand to help you cover your mortgage or rent, and if you’ve been made redundant or become too ill to work for a short amount of time (more often than not, this is a 12-month time frame). There are of course exceptions to the above policies, such as not paying out if you decide to take voluntary redundancy.

 

·         An additional option is critical illness cover. Going down this avenue allows you to have a one-off payment if you contract a particular, specific illness. CIC could then be used to pay off your outstanding mortgage or paying for changes needed to be made to your home, chairlifts etc.

 

·         Payment protection insurance (PPI), which is a widely known form of insurance, will help you cover a specific debt, loan or credit card, for example. In the event of an accident, sickness or sometimes redundancy, the cover then becomes available for a specified period, normally 12 months,

 

·         Mortgage payment protection insurance is cover that will see off your mortgage payments in full, customarily for 12 months and at the end of a deferred period.

 

*Always examine your options and see what the best deal for you is.

 

Work and state benefits

 

In regards to personal financial protection, you should always take the time to check what protection you could already have. If you’re employed, or your partner for that fact, you could well have some cover through a workplace benefits scheme.

 

These benefits can include life insurance, sick pay, or even some form of income protection, not dissimilar to the protection we discussed in the income protection section. Ask your HR department for more details. Don’t forget that if you leave your job your benefits will be lost.

 

What about state benefits?

 

State benefits, unfortunately, equate to a great deal less than many expect. So even if you are eligible for some financial support, it's likely not to be much help.

 

Using your savings

 

A final option we have added in is to ensure you have some financial cover set up for the short-term through savings, and three months’ worth of savings is the general going rate people go by. This should include enough to cover rent or mortgage payments, along with food and utility bills, and any debt payment plans.

 

Image: GotCredit under Creative Commons.