Why You Should Have Income Protection When You Take Out a Mortgage

Taking out a mortgage is a big step. It’s a long-term commitment, and it’s natural to feel excited about owning your own home. But life is unpredictable. If something unexpected happens, like illness or an accident, it can affect your ability to work and earn an income. This is where income protection can step in and offer peace of mind. 

 

What is Income Protection? 

 

Income protection is an insurance policy that helps you cover your bills if you are unable to work due to illness or injury. It pays out a percentage of your salary, often up to 70%, until you can return to work or until the end of the policy. 

 

Why Should You Have Income Protection with a Mortgage? 

 

1. Covering Mortgage Payments 

 

A mortgage is one of the largest financial commitments you'll ever make. If you become ill or injured and can’t work, you might struggle to keep up with monthly payments. Income protection can ensure your mortgage is still covered, giving you time to recover without the added stress of worrying about losing your home. 

 

2. Reducing Financial Stress 

 

Dealing with health problems is tough enough without the added pressure of financial strain. If you're unable to work, it could be tempting to dip into savings or take on debt, which can make the situation worse. Having income protection means you can focus on getting better, knowing your financial responsibilities are taken care of. 

 

3. Peace of Mind for You and Your Family 

 

Life is unpredictable, and knowing that your mortgage and living costs are covered even if something goes wrong can give you peace of mind. It’s reassuring to know that if your income suddenly stops, your policy will help you through the tough times. 

 

4. It’s Cheaper than You Think 

 

Many people think income protection is expensive, but it can be surprisingly affordable. The cost depends on factors like your age, health, and the level of coverage you choose, but it’s often much more reasonable than most people expect. When you compare the cost to the potential financial strain of not having it, it becomes clear why it's a wise investment. 

 

5. Long-Term Security 

 

A mortgage can last 25 years or more, and you’ll need long-term protection against the possibility of being unable to work. If you rely on one income, losing that income for an extended period can be devastating. Income protection ensures that you’re covered for as long as you need it, which could be months or even years, depending on your policy. 

 

How to Choose the Right Income Protection 

 

When choosing an income protection policy, consider factors like: 

 

• Waiting Period: This is how long you’ll need to be off work before the policy starts paying out. Some policies have a short waiting period, while others might make you wait longer. 

 

• Policy Length: Look for a policy that covers you for as long as possible, especially if you’re young and have many years left on your mortgage. 

 

• Coverage Amount: Make sure the policy will cover a significant portion of your income, ideally enough to pay your mortgage and living expenses. 

 

• Exclusions: Every policy has exclusions, so check the terms carefully to make sure it covers the types of illnesses or accidents that are relevant to you. 

 

Final Thoughts 

 

Having an income protection policy when you take out a mortgage in the UK isn’t just about protecting yourself; it’s about securing your home, your family, and your future. It’s a safety net that ensures, no matter what happens, you won’t lose the roof over your head. While no one wants to think about the worst-case scenario, being prepared with the right insurance can make all the difference when life takes an unexpected turn 

 

 

Victoria Bennett 

victoria@hdconsultants.net