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  • Compare Life Insurance Online – But Beware of the Pitfalls - Being able to compare life insurance online can be a great labour saving method of getting your protection policies easily and cheaply. However, we have identified a number of potential pitfalls that could lead to someone not having enough cover, the wrong term or even having a claim refused. Going for the cheapest option isn’t always the right choice. In many cases the cheapest life insurance quote may be ‘decreasing’ cover with ‘reviewable’ monthly payments. This means the cover goes down over time and the payments could go up over time so it’s important to check the details and understand what you are being sold. Most people like to be able to budget and ‘guaranteed’ monthly premiums will achieve this. The payments will stay the same throughout the term of the policy unless the cover is changed. ‘Decreasing’ cover is OK to protect a repayment mortgage which also goes down over time but it is completely the wrong option for an interest only mortgage. ‘Level’ cover would be required to protect an interest only mortgage correctly because the cover will stay the same and always be sufficient to repay the mortgage. Level cover can be used to protect a repayment mortgage and this will generate a surplus of cover as the mortgage goes down giving additional benefit to the people left behind. It is important to choose the right ‘term’ of cover. This is how long the policy lasts. To protect a mortgage it makes sense to have insurance for the same length of time. Once the mortgage is paid the cover is no longer required to protect the family home. Life insurance that extends beyond the term of the mortgage is therefore a matter of personal choice. With ‘Term Assurance’ (life insurance for a fixed length of time) the maximum term is usually 40 years up a maximum age of 85. Some online comparison sites occasionally get confused and I have seen ‘Term Assurance’ offered beyond the age of 90. This is not available in the market and we have made the websites concerned aware of the misleading error. For cover beyond the age of 85 ‘Whole of Life’ cover may be the solution. This is more expensive than ‘Term Assurance’ because the insurance is until death (provided the monthly payments are made) and this means the insurance company will have to pay a claim eventually. If you are not 100% sure you know what you need, be wary of websites that offer no advice and allow you to apply online or print your own application form. If something important is not declared it may make a claim invalid. ‘Non-disclosure’ is the main reason insurance companies refuse to pay a claim. The general rule of thumb is ‘if you’re not sure if the insurance company needs to know, tell them anyway’. Alternatively give the insurer a call or speak to an adviser. Most mortgage advisers should be able to offer advice about life insurance.
  • Large Mortgages and Mortgages from £500,000 to £1 Million and Over - Large mortgages can sometimes pose problems for borrowers but there are options available via specialist brokers that can’t be found on the high street. Many high street mortgage lenders have a maximum loan amount and in many cases this is £500,000 with some slightly more generous lenders limiting their maximum to £1 million. So what can be done if the mortgage is over £1,000,000? Finding lenders that will provide mortgages of £500,000 or above can be tricky but if you know where to look there are offers out there and some pretty good ones too (often better then mainstream residential mortgage offers). The results available from online comparison websites can easily mislead a borrower into thinking a certain offer is available only to discover the lender will not lend the amount required. In this instance being able to compare mortgages online could make the process take longer than is necessary. There are choices: Trying to find out which lenders to approach for a mortgage over £1 Million can be a time consuming process so it makes sense to speak with an independent adviser with access to the ‘whole of market’ and knowledge in this field. Some lenders will have specialist ‘large loan’ teams to cater specifically for bigger mortgages and high net worth clients. Having a separate team for borrowers in need of £1million or above means the cases can be looked at more quickly and dealt with on a more personal level. There are also specialist lenders who offer very competitive rates for borrowers with large mortgages in excess of £1 Million and in some cases, £1 Million is the minimum mortgage they will consider. Specialist lenders who are not bound by the same criteria as bigger banks are also able to cater for individuals who don’t always fit the preferred model. With the right help, the process can be very straightforward.
  • Low Loan to Value (LTV) Mortgage – Compare Mortgages - With falling house prices and mortgage lenders concerned about their exposure to risk the most competitive mortgage rates are currently being offered to applicants with low loan to value mortgages. Gone are the days of 125% mortgages and free and easy lending criteria with house prices climbing month on month. Now to qualify for the best mortgage rates available customers are required to meet lower risk criteria. It makes bad business sense for a mortgage lender to offer mortgages in excess of the value of a home if the property is likely to be worth less in just a few months. That would put the mortgage holder into a negative equity situation and expose the lender to more risk because if they have to repossess the property they would certainly lose money. Lenders are therefore playing it nice and safe by offering the best market rates to people with low loan to value mortgages. Borrowers with more than 40% equity (that’s 60% loan-to-value) will find themselves welcomed by any lender with virtually open arms (provided there is no adverse credit history). > Get in touch with a ‘whole of market’ mortgage adviser. Even borrowers with 25% Equity (75% loan-to-value) are able to find favourable rates but with falling house prices there are many people who through no fault of their own now have less equity than before. Borrowers with less than 25% equity are now finding it harder to secure a mortgage with a competitive rate just because the banks have changed the way they lend. Because of falling house prices there are more borrowers now who are unable to secure any kind of mortgage offer. Some lenders have 90% loan to value offers available but clients need to be ‘squeaky clean’ and even then rates are above 6.5%. Any borrower with less than 10% equity will be struggling to find any deals available and will find themselves in the same situation as anyone with negative equity. One saving grace is the Bank of England base rate cuts which many lenders have passed on to their customers.
  • Self Employed Income Protection – Long Term & Short Term Accident & Sickness Insurance Cover - Self employed people do not receive any employee benefits when they are off sick or are unable to work because of an accident so it’s important to arrange income protection insurance. Benefits from the Government are minimal and Statutory Sick Pay is currently a meagre £79.15 per week or £343 per month which is barely enough to feed a family of 4 let alone pay a mortgage, heating and electricity bills or any other loans. Therefore, self employed people need to arrange income protection for themselves that will cover important expenses if they are off work due to sickness or accident. Income protection is not designed to replace a self emplyed persons income entirely but it is designed to replace a reasonable amount to make sure a reasonable standard of living can be maintained. Long Term Cover Long term income protection cover is also known as Permanent Health Insurance and is the most suitable solution for self employed people who have no sick pay but do have long term liabilites like a mortgage or a family that needs supporting. Income protection can even be used by employed people who only receive sick pay for a few months. This type of cover can provide a monthly benefit for the full term of the policy. If a claim is made in the very first year of a 25 year policy the monthly benefit could be paid for the remaining 24 years which is why this type of income protection would be ideal for a self employed person with a mortgage which could be repaid from the proceeds of a claim for the full term of the mortgage. Multiple claims can also be made throughout the life of the policy. Permanent Health Insurance can also be combined with life and critical illness cover to reduce the overall cost of protection. Get helpful advice about this type of income protection and a quote from CertainLife.co.uk Short Term Cover Accident & Sickness cover is often sold as ‘Accident, Sickness & Unemployment’ (ASU) cover. As a self employed person, having unemployment cover is impractical and potentially pointless because it may not be possible to make a claim unless also eligible to claim Jobseekers Allowance which involves ceasing work as a self employed person. Accident & Sickness cover can however be purchased without unemployment cover and is often cheaper this way. Accident & Sickness policies will pay a monthly income benefit for up to either 12 or 24 months. Once the policyholder returns to work or the 12 or 24 months is up, the payments will stop but after the policyholder has been back to work for 6 months they can claim again if something else happens. Some specialist policies can be for a longer term such as 25 years. The maximum benefit payment will still be 12 or 24 months but after a claim the policy will stay in place. These specialist income protection policies can be combined with life insurance and critical illness cover to bring the total cost of cover down. This type of policy wold not be suitable for a serious or long term illness. Get helpful advice about this type of income protection and a quote from CertainLife.co.uk
  • Critical Illness & Cancer Cover – Are they the same thing? - Statistically a high percentage of us are at risk from cancer so it’s natural to consider some sort of protection that could provide a cash lump sum to either clear our debts, take care of our families or pay for treatment if we are diagnosed with cancer. Critical Illness Cover can provide exactly that but not all types of cancer are covered. The important thing to know is that cancer comes in many shapes, forms and degrees of severity and so the providers of Critical Illness Cover take this into account. Because certain types of cancer are less severe than others, and in a lot of cases easily treatable, insurers are less likely to cover the milder forms of the disease. Someone who purchased critical illness cover a few years ago should think twice about replacing their policy because the cancer ‘definitions’ were much more generic in the past. The types of cancer covered are likely to broader with an old policy so anyone thinking about replacing theirs should closely compare what they will be getting with what they have. Insurers use statistical information to calculate with high degrees of accuracy the probability that they will have to pay out a claim. They also weigh up the impact of certain types of cancer on a persons life and so nowadays the cancer ‘definitions’ are much more specific. Anyone considering critical illness cover should be able to obtain a full list of illnesses and definitions from prospective insurers or they should contact an independent adviser to do the research for them because there is quite a lot of variety in the market. All insurers provide cover for predetermined ABI (Association of British Insurers) definitions and beyond that the illnesses covered by each insurer varies.