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Kal Woodley from Grand Union Financial shares his expertise on different types of insurance policies.

What types of insurance do you offer?

Before we dive in, it’s really important to understand that you should always seek advice from a regulated advisor. Whatever I say on this podcast shouldn’t be taken as advice. I’m here to give you an overview, but because everyone’s different you should always seek advice from a regulated financial advisor or regulated mortgage broker.

In terms of the insurance we provide, we do life insurance, critical illness cover, income protection, key man insurance, relevant life cover and private medical insurance.

There are some other types of policies we offer, but these are the most common day to day ones with our client base.

Why do we need life insurance?

If I had a pound for every time a client asked me that I would be able to retire! To put it into context, we’re all happy to insure our phones and our pets. We legally have to insure our cars but we don’t bat an eyelid about that. Yet so many people don’t want to insure their own life.

It’s true that in some personal circumstances you may not need to, but for the majority of people I come across who are taking out a mortgage with a partner, it is.

Life insurance is there to protect against financial debt. When you’re getting yourselves into debt with a mortgage, you should always consider protection. People quite happily go full steam ahead with the mortgage, but you’ve got to understand why life insurance is such a crucial part of it. In a way it’s even more important than the mortgage itself.

It’s there to financially protect you in the event of death. It’s an important mechanism that helps us survive.

We’ve all become so accustomed to adverts saying that we need insurance for this and that.
So it’s hard to get people to understand that life insurance or critical illness cover is there to keep a roof over your head.

Also, if you’re increasing your mortgage or growing your family it’s something that should be reviewed. It’s about understanding the importance of this. I don’t really care if I lose my phone…but if the worst were to happen to me I need to make sure that my partner keeps our home.

What is critical illness cover and how does it work?

Critical illness cover is there to protect you in the event of a life altering illness or condition.

Back in the 1990s if you had cancer, it was a one-way ticket. The likelihood of surviving it was relatively low compared to today. Medical advances now can prolong your life or get you into remission. Critical illness cover is there to help financially protect you and pay you a lump sum to help you recover from your illness.

You’ll gain a payment on diagnosis of a set list of conditions and illnesses. It’s there to help you in difficult times, when you’re undergoing treatment and may not be able to work – but you still have a mortgage to pay and a family to support.

An important part of this is that it doesn’t just cover heart disease and cancer. Mental health is a huge talking point now and we’re starting to really uncover how this can affect you later on in life, including early onset dementia. There’s still a lot we don’t know.

But we do know that critical illness cover will aid you in times of need. It does evolve, for example, if you have a policy from the 1990s they might pay you out 100% if you were diagnosed with cancer right now. With a newer policy, you’ll be paid out but probably in staged payments.

What is income protection and how does this work?

Income protection is there in case you are medically or physically unable to continue earning an income. If you are incapacitated or you have a short-term illness and you’re not able to earn an income, whether you’re employed or self-employed, income protection is there.

It will pay out on a monthly basis to help you keep up with your mandatory costs – your mortgage and your bills. You can have a policy in place for the main breadwinner in your home or you can look at a joint income protection policy.

It’s very important for single people too. If you own a house and you don’t have a partner or next of kin, income protection is relevant because if you get ill, there’s no one else there to pick up the financial slack.

It’s there specifically to help in your time of need. But it’s relatively short term, to get you back on your feet and earning an income.

Note that if you’re made redundant or you choose to resign from your employed position, it doesn’t cover you. When you speak to a regulated financial advisor or mortgage broker, you will get a copy of the Insurer’s policy and we’ll explore whether it’s right for you and your personal circumstances. We’ll explain what your income protection policy covers and how you claim in a time of need.

What about buildings and contents insurance? How can you help with this?
This is quite an open market and obviously people can search online and quite easily buy this. But if you have a semi commercial property or a property that doesn’t fit the criteria of a standard building and contents policy, we’re here to help.

Generally, however, given our whole of market panel, we can help any clients get their buildings and contents cover. We also advise on land or fully commercial property. We have a wide variety of insurers on our panel and can look at assets and properties of all different shapes and sizes.

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Can you help with Landlord insurance as well?

We can indeed. If it’s an HMO for example, as long as you have all the relevant permissions in place and the properties are fully covered with EPC certificates, electrical certificates etc, that’s absolutely fine. We can help whether your property is a standard residence, an HMO or even a commercial property where you have a leaseholder.

Can you combine policies?

With life and critical illness insurance you can get multicover. It’s usually more cost efficient to do a combined policy. So, for example, if you need a life policy, income protection and critical illness cover, it usually helps to go with one insurer who can put that all together for you.

It’s not for everyone – when you work with your regulated financial advisor, ask about combining the policies and we will present your quote in the most cost-efficient way.

How much should I budget for insurance?

Whenever I do a mortgage I always talk about protection. As a regulated advisor I always try to agree a budget with the client. We look at your net income and your disposable income to decide what to allocate towards your mortgage and protection.

We need to make sure that you can easily afford the mortgage and insurance at the same time. It’s part of the sales advice process and it’s down to your personal circumstances.

It’s great purchasing a property, but remember that your protection needs could increase if you start a family. You won’t just look at protection at the beginning of your mortgage process. Financial protection goes with you through your life events – so when things change, go back to your advisor and check that your current policies still work for your circumstances.

You might need an addition or an upgrade at an additional cost, which will require a new budgeting process at that point in time.

Is protection expensive?

People are always sceptical about the cost of protection. They will think that getting life protection of £100,000, for example, will be ridiculous and unaffordable. But actually you can get a life insurance policy for less than £10 per month. Life insurance policies are not expensive.

Critical illness cover is subject to underwriting – they look at your past medical history and conditions that run in your family. But getting life insurance and critical illness cover today is cheaper than it will be tomorrow. As you get older the cost of that policy goes up – so the earlier you can get it, the better.

If you get a mortgage and you don’t have a policy, clearly you run the immediate risk of not being protected. Plus, later down the line, should you choose to get life insurance or critical illness cover, it will be more expensive than at the beginning of your mortgage term.

What else should we consider around insurance and protection?

For those who don’t have life insurance or protection, it’s well worth having a conversation with a regulated financial advisor or regulated Mortgage Broker. You will sleep easy at night knowing that you’re covered.

This is all about protecting yourself and your loved ones from financial distress. We live in a world of what ifs – and I’ve come across too many horror stories. I’m not here to try and scare anyone, but that’s life, these things can and do happen.

One day things are great, the next day they’re not. It’s better to have it and not need it – which is what they say with all insurance. But this is not your phone or your pet, this is your life. So seek regulated advice.