Insurance can sometimes be confusing for some people. There are so many options available that it can be difficult to choose the right product and make sure we are adequately covered. This may seem true, but insurance is an integral part of everyday life.
Buildings Insurance
You home is most likely your most valuable possession. Therefore, it is crucial to have adequate buildings insurance.
Buildings insurance covers your building and any items you might leave behind when you move. This includes patios, driveways, fences, walls, permanent fixtures, such as kitchens and bathrooms, and will also cover drives and fences. This includes accidental damage such as fire, storms, burst pipes, and other natural disasters.
Although it is not required by law to have buildings insurance, almost all mortgage lenders will insist on this coverage as they want to protect their assets, even temporarily.
Many lenders offer block-building insurance policies. Lender and insurer agree on the premium rate and cover, but rather than issuing each borrower a policy number, a master policy is created with copies by both the lender as well as the insurer.
These premiums may not be the most affordable in price, so it is important to get quotes from other companies.
Each property will have a different amount of insurance. The property’s re-instatement value will be provided by the valuer. This is the cost of rebuilding the property in the event that it is completely destroyed. This figure is not directly linked to the value for mortgage purposes or the price the buyer has agreed to pay.
Contents Insurance
Contents insurance covers your household goods and possessions within your home and may also cover the garden, if applicable. To put it another way, contents are everything you would normally bring with you when you move.
Although the lender may not require you to take out contents insurance, it is recommended in most cases. You may not be able to replace your belongings in case of fire, flood, or burglary.
Many policies provide coverage on a “new for old” basis. This means that if anything happens to your possessions, such as the TV or washing machines, you should be able replace them with a new model.
Mortgage Payment Protection Insurance, (MPPI)
Mortgage Payment Protection Insurance (MPPI) also known as accident and sickness insurance (ASU), it covers your mortgage repayments in the event of an accident, a fall ill, or loss of your job.
Most policies provide coverage for 12 months. Your policy should include coverage for your entire mortgage amount and any related expenses, such as insurance policies or pension plans.
Many payment protection insurers offer modular coverage. You can choose to have unemployment only if you are concerned about job loss or an accident and sickness only option, depending on what is most important to you.
After you file a claim, you won’t be eligible to claim any money from your policy. You will typically have to wait for three to four months, which is called the deferral period, before you can start receiving insurance payouts.
Some insurers offer back-to-day one coverage that covers you starting the day you file a claim.
The payment is made within 30 days of the date you submitted your claim. You must have been away from work for at least one month before you receive it. If you file a claim, most policies will have an exclusion period of 30,60 or more days.
Life Insurance
Life insurance pays a lump sum upon your death or sooner if you have a terminal illness. The lump sum payment can be used to pay off a mortgage, or it may be passed on as an inheritance.
There are two types life insurance policies: decreasing term and level term.
A level term policy will often be combined with an interest-only mortgage. It is for a fixed term and pays the amount you choose at the beginning in the event of your death.
A capital repayment mortgage is often paired with decreasing term insurance. As the amount of outstanding mortgage debt decreases, it offers a lower payout each year.
Both types of insurance have many factors that the provider will consider when calculating the premium. These factors include your age, weight and medical history.
Five Points to Consider When Taking out Insurance
1. Talking to a specialist advisor before purchasing insurance can pay dividends. Make sure your adviser can offer you a wide range of policies from different providers.
2. You should shop around for mortgage payment protection insurance (MPPI). Do your research before you agree to the lender’s policy. Lenders may not offer the best rates in the market, but they do have policies.
3. Budget for your monthly insurance payments. The cost of MPPI and Life insurance is lower if you’re younger and healthier. However, monthly payments can easily reach over PS50.
4. Always find out your excess, or the amount you must pay before your insurance pays out. You will find exclusions in many policies so make sure you know what they are.
5. Many people don’t adjust their insurance policies to reflect changes in their lives. You and your dependents could be underinsured if your insurance policies do not reflect your current obligations.
