Mortgage Protection and Estate Planning: What you need to know
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No one likes to contemplate the end of their life, or how your family will cope after you’re gone, but life insurance is a must-have policy, not a luxury. So you put your life insurance in place, print off the policy paperwork, and put it in your safe place with your will and other important documents, never to be seen again, right?
That’s not exactly ideal. You should review from time to time, and there will be events that make that even more important.
When should you review your life insurance?
So when should you review your life insurance policy? Here are our top 6 good reasons.
You have gone through a significant event in your life.
You could have got married, divorced, or had children. Anything significant that happens in your life that changes your responsibilities or lifestyle. You’re no longer responsible for just you, so putting the correct protection in place in case something happens to you means that your family will be looked after when you’re gone.
You’ve bought your first home, moved into a larger home, or downsized.
Your home is the largest investment that most people ever make, so it’s important that it’s properly protected for your family if you or your partner die and your household income is reduced. How will the family you leave behind afford to pay the mortgage and stay in the family home?
You’ve changed jobs or your income has changed.
You may have won a promotion, or moved to a new, higher-paying job. Your family will have more disposable income available, so you should account for this in your life insurance, should something happen to you. You should also consider the level of cover that any employer policy may provide.
You could be supporting family members.
Your parents or elderly or unwell relatives could be living with you, or you could be supporting your children, through university for example. You and they rely on your income so your life cover should be sufficient to continue this care.
You’ve taken on a new loan like home equity or other debt.
Have you considered any additional borrowing secured to your home? Equity loans, for example, could become due when you die, so the sale of your family home is likely unless you have some other payment vehicle in place- like life insurance.
A loved one experiences a change in their health
You may be supporting a loved one who needs treatment that has to be paid for or additional at-home support. You and they will rely on your income, but if you die they could be left with financial and medical difficulties. Your life insurance could be used to continue that support if it is sufficient.
Jade Topliss is a mortgage protection specialist at Liddle Perrett. She is passionate about working with her clients and finding the right solutions to meet their needs and circumstances.
“Life Insurance is one of those things that no one really likes to deal with because it makes us face our own mortality. But I treat it as a positive experience because it means that once in place, you have peace of mind that should something happen to you, those people who you love and leave behind will have a sum of money in place to ensure that their lives can continue in the way that you have worked so hard to achieve.”
What happens if my life insurance isn’t enough to cover everything?
At the very least your life insurance should cover any debts secured on your home. That ensures that your family home will be retained and your loved ones can continue to live there. But if there is a shortfall your home may have to be sold to pay any debts. And if you were supporting a family member through university, with healthcare needs, or relatives were living with you they may find themselves without your support, or even worse, homeless, if they can’s come up with the finances to cover your commitments.
Just one more thing
Your life insurance payout could have an impact on your inheritance tax liability. If your total assets are over the threshold set by the Government, your estate could have to pay IHT. Our sister company Will Protect can assist you with your estate planning and help you to mitigate exposure of your estate to inheritance tax. Contact the Will Protect team here*
*You are now departing from the regulatory site of Liddle Perrett. Neither Liddle Perrett or PRIMIS Mortgage Network is responsible for the accuracy of the information contained within the linked site
Liddle Perrett Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE