Life Insurance

What is it?

Life insurance, sometimes referred to as life assurance or term insurance is a policy that pays out a lump sum or income in the event of the insured persons death.

Life insurance is not a mandatory requirement of the mortgage lender. However, life insurance should be considered as the minimum sensible level of protection for most people taking on the burden of a mortgage.

Why do you need it?

Life insurance pays out a lump sum or income on the death of the person insured. If you are a single person with no dependents then you might consider it a waste of time as you are leaving no burden and that lump sum is of no benefit to you.

However, one thing to be aware of is that if you die owing money, the debt will pass on to your next of kin!

For the main breadwinner in a family with small children, the need is obvious. Take away that main income and it would not take long before the financial stability of the family is seriously affected.

What will the State provide?

The main benefits the State may provide are the Widowed Parent's Allowance and Child Benefit. Depending on whether the widow(er) qualifies for Income Support, the State may or may not help with paying the mortgage interest.

The method for calculating which benefits an individual may qualify for is extremely complicated. More information is available at the Department of Work and Pensions website www.dss.gov.uk

Things to bear in mind

Term insurance is a flexible product and can be used for a variety of protection needs from the obvious mortgage protection to ensuring your dependants life style is not compromised if you die.

It can also be used in inheritance tax planning, for example if your estate is above the threshold, it can prevent your beneficiaries from having to sell personal assets and sentimental treasures to meet the bill.

It is important to get good advice when arranging this type of cover because getting it right at outset can save a lot of problems when you least need them.

There are many different types of plan, designed to address different shortfalls, these include:

• Level Term Assurance provides a set amount of money if the person insured dies during the term of the policy. This type of cover is useful for personal or family protection and protecting interest only mortgages.

• Decreasing Term Assurance provides a lump sum that decreases in line with the reducing balance of a repayment mortgage.

• Family Income Benefit is designed to provide an income to dependents following the death of the insured person.

Our panel of insurers have been carefully selected from a number of well known providers. Before you make any decisions you should consult us for unbiased advice.

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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

We offer all our clients a free initial consultation after which a non refundable commitment fee of £95 will be charged with a further £250 payable on completion based on individual client circumstances. We also offer a fee only option whereby we charge a 2% broker fee on the amount borrowed and any commission derived from the lender is rebated back to the client.

The overall cost for comparison is 7.9% APR

Riverside Mortgages Ltd is registered in England and Wales. Registration Number: 5978086