Why have life insurance and what do I need for my application?
Your new home and taking out the all-important mortgage is just the start.
Protection is about ensuring that you can continue to afford the mortgage and stay in your home should things not go to plan in the future. If you become unwell or are unable to work, having a financial safety net can give you choices and options on how you deal with these ‘less welcome’ surprises - life cover, critical illness cover, income protection or perhaps a combination of these can all mean future security.
As part of our fee free service, your mortgage adviser will ask if you want to speak to one of our expert protection advisers - usually once you’ve received your mortgage recommendation or, if you prefer you can call a protection adviser at any time directly on 0800 073 1932. Either way it’s a good idea to be prepared for this conversation – find out what you need below:
I already have cover with my employer, or privately:
If you already have cover in place, whether that’s through your employer or privately, it’s important to check exactly what you do or don’t have. Gather these details and make sure they are to hand when you speak to your protection adviser:
• How much sick pay are you entitled to and how long for?
• Does your employer provide any ‘death in service’ benefit? If so, how much?
• Do you have any other protection benefits?
• Do you have existing personal policies? If yes,
o Who are they with?
o What type of cover do you have (life cover, illness cover, income protection)?
o When did these policies start and when will they end?
• How much are you covered for?
• How much do you pay for these?
If you’re not sure where to find these details talk to your HR department about your employee benefits. For personal cover, you’ll have been sent plan details when these policies started. If you don’t have these, a good place to start is your bank statements and call the insurer who should be able to help.
For peace of mind, we’ll assess the protection you already have alongside looking at other options to ensure that your current needs and priorities can be met. It’s always a good idea to confirm these details especially if your cover is through your employer, as if it is less than you think, it is better to know now, rather than when you need to call on it.
I don’t have protection in place
If you don’t have cover in place, no problem! Your expert protection adviser will talk through the options available and help work out what protection is most relevant for your situation and the best fit for your current and future priorities. We want to help you stay in your home.
What do I need for a protection application?
When you’re ready to proceed with an application, it’s quick and simple. We can complete most applications with you online or over the phone in a 15 to 45 min call – and our service is completely fee free.
To progress, we’ll need the following information:
• Your doctor’s name and address
• Your medical history – details of any current or previous serious illnesses suffered by either you or your immediate family
• Details of any medication you are currently taking or have taken in the last 5 years
• Your height and weight measurements
• If applicable, your existing policy details (such as the type of cover)
• Direct debit details – these are required so we can submit your application, but payments won’t be taken by the insurer until you give the go ahead to start the policy and after you have accepted the T&Cs
It may feel like a lot, but our advisers will be there every step of the way.
One important thing is that we’ll need to complete the application details with each person who we’ll be recommending the policy for. This is so that we can ensure all health and lifestyle disclosures are accurate and in full - this accuracy is vital to ensure cover remains valid and is there when you need it most.
Why should I consider protection?Protection is there to ensure that whatever is important to you is protected no matter what life throws at you. We tend to focus on the things that impact you being able to maintain your mortgage but life changes will have a wider impact, so we’ll discuss these as well.
Although it can be a difficult conversation, we want you and your loved ones to be financially secure if you’re diagnosed with a serious illness, pass away or if you were unable to work for a prolonged time. Having a financial contingency can make these unexpected bumps in the road easier and less stressful to manage.
Frequently asked questions on protection
Am I eligible?
If you are over 18 and a UK resident it’s likely that you’re eligible to apply for protection. However, you’re not automatically guaranteed to be accepted - that’ll depend on your health, lifestyle, occupation, and family history.
If there are complicating factors that you’re concerned may affect your ability to obtain protection, L&C’s advisers can discuss these with you and research providers prior to application. This will ensure when you do apply it’s with the provider who will give you the best outcome, the most suitable cover and at the best price - saving you time and frustration!
For some products like Income Protection, due to the nature of the cover you will also need to have been registered with a UK GP for a minimum of 2 years to be eligible to apply.
Is a protection policy compulsory when taking out a mortgage?No, protection policies are not compulsory when you take out a mortgage. However, if you are unable to make the payments on your mortgage in the event of illness or death, the lender would be able to repossess the property to recoup their loan. If you have dependents or are dependent on your own ability to work, then you should consider protection to make sure your ability to stay in your home is secure.
Are all policies the same?
No, each provider will have differences in the policy they will offer and will underwrite their applications in different ways; medical history, lifestyle, and hobbies for example, will vary from provider to provider.
There are also differences between providers offering the same type of cover, range of cover and quality of definitions. Standard exclusions can be very important at the point of claim, so this also needs to be considered.
We’d strongly recommend seeking expert advice from one of our fee free protection advisers who can advise you on the most suitable policy and provider, at the right price.
Are there restrictions as to how I spend the payout?
There are no restrictions at all - the money will be made available to you to use however you need to make your life financially easier at a difficult time. It can be used to pay off or reduce your mortgage, fund medical treatments that may be available more quickly privately or not available on the NHS, adjust your home, replace lost income whilst you are unable to work, allow your partner to take time off work whilst you are recovering, or even just to treat the family to a special holiday.
Whatever you choose to use the payout for, it’s there to take the pressure off whilst you have other things to focus on and to give you choices and options on what you do next.
Will I pay tax on the benefits?No, as with any personal protection benefits are paid tax free. Although it’s worth noting life cover could be subject to inheritance tax.
Unless policies are held in trust, the total benefit you receive will be counted in the value of the deceased person’s estate which, if over specific levels, could incur inheritance tax. L&C isn’t a tax adviser and so we’d suggest speaking to an independent tax specialist for advice.
I’m not sure I can afford cover, what should I do?
Speak to an expert protection adviser first – there are many options available, and your adviser will help to find a policy that meets your circumstances at a manageable cost.
Also, it’s important to know that protection doesn’t have to be all or nothing – if you can’t afford to fully protect the whole balance of your mortgage, you can chose a policy that could pay out a lump sum of £50,000 or £100,000, for example, to help manage the bills. There are lots of options available to you and our advisers can tailor cover to any budget.