Protecting First Time Buyers With Life Cover And Income Protection

The Clients

The clients were first-time buyers purchasing their first home together. As part of the mortgage process, they wanted to ensure they had appropriate protection in place.

While their initial focus was life cover to clear the mortgage in the event of death, both clients also recognised that if either of them were unable to work due to illness or injury, the remaining income alone would not be sufficient to comfortably maintain the mortgage and household commitments.

The Challenge

The key objective was to ensure the clients were protected against two major financial risks:

• The mortgage being left outstanding if either client passed away

• A potential loss of income if either client was unable to work for an extended period

Both clients also had employer sick pay arrangements, meaning any income protection policies needed to be structured in a way that complemented these benefits without increasing premiums unnecessarily.

The Solution

We arranged a protection package covering both risks.

Firstly, a joint decreasing life cover policy was arranged to match both the mortgage balance and term, ensuring the mortgage would be cleared if either client passed away during the life of the loan.

Secondly, we arranged individual income protection policies for each client. As both had sick pay available from their employers, the policies were structured with a three-month deferred period, meaning the cover would begin once their sick pay ended.

Key details of the protection arranged:

Life Cover

• Type: Joint Decreasing Life Cover

• Term: Matching mortgage term and balance

Income Protection

• Policy 1 Monthly Benefit: £3,000

• Policy 2 Monthly Benefit: £3,100

• Deferred Period: 3 months

• Policies arranged individually for each client

Total Protection Package Premium: £90.10 per month

As both clients were fit and healthy with no medical concerns, underwriting was straightforward and terms were issued immediately.

The Outcome

The clients now have protection in place covering both long-term and short-term financial risks.

If either client were to pass away, the mortgage would be cleared in full. In addition, if either of them were unable to work due to illness or injury, the income protection policies would provide a replacement income, helping ensure the mortgage and household commitments could continue to be met.

This structure provides the clients with peace of mind as they begin their journey as homeowners.