Saturday 28th June 2025 is Insurance Awareness Day. We're supporting this by explaining what some of the different insurances are that we can help with and why you might consider them.
Why you might consider mortgage protection/income protection...
Your mortgage payment is likely to be one of your largest monthly outgoings. The amount of money you’ll borrow from a lender (bank or building society) will have been calculated based on your confirmed income. It’s called loan to income ratio (LTI). The lender uses your salary (and/or income) to ensure you can meet the ongoing monthly commitment for your mortgage. What happens if your income suddenly stopped? How would you continue to be able to pay your mortgage in full each month without a salary?
A mortgage protection policy is designed to help you (or your partner/family) cover that monthly payment should you not be able to. It offers a monthly tax-free replacement income if you’re out of work due to accident, sickness, or injury, and is typically up to 65% of your income. It covers illnesses or injuries that prevent you from doing your job in the short-term or long-term. Let’s take the example of a dentist. They rely on the dexterity of their hands and the ability to physically stand and work with precision and if they broke an arm or leg and couldn’t perform their duties, Income Protection can step in to replace their income..
Ideal for...
Whilst it’s recommended for anyone who wants peace of mind that they’ll be able to continue to pay the mortgage should their income reduce or stop completely, there are certain circumstances that perhaps would make this cover a higher priority and an essential financial lifeline. These include a mortgage with only one income, a joint mortgage using primarily one income, and a mortgage where the income was stretched to cover the loan amount or where the borrowing was the maximum amount available.
Good to know about income protection...
There’s no need for a specific diagnosis so if you're signed off work and unable to carry out your occupation, you can claim. If you’re employed, you might qualify for Statutory Sick Pay (SSP). Although you can't get SSP until you’ve been off sick for more than 4 days, it’s typically much less than the UK average salary of £37,430.*
As at the time of this blog, SSP is £118.75** a week for up to a maximum of 28 weeks. It’s worth finding out what your employer offers in terms of sick pay so you understand what your income would be reduced to and how long they’d continue to pay it. For example, if your employer provides 3 months of sick pay, you could choose to wait for 13 weeks before your income protection insurance starts to pay out to maintain a steady income.
If you move jobs or home, your income protection cover would move with you. Although these policies are primarily referred to as mortgage protection, they protect your income. Income that pays your mortgage payment and many other essential household bills from food to utilities.
You can get income protection for as little as £8 per month, depending on your age, health, occupation, and the level of cover you choose. For example, a healthy 30-year-old non-smoker in a low-risk job could secure £1,000 of monthly income protection cover at this price point, though more comprehensive policies typically cost more.
If you’d like to understand more about protecting your income, including the cost to do so, we can provide you with a quotation and offer you advice to allow you to make an informed decision. Call us on 08000 38 37 36 or book an appointment today to talk to one of our advisers.
