Protecting a family with three young children
Scenario
West End Protect recently helped a couple who had recently remortgaged their home to borrow additional funds for home improvements. They had some existing policies that they took out around 12 years ago when they bought their first home but since then their mortgage has tripled in size and they now have 3 young children to consider.
In this scenario the policies were no longer fit for purpose as their mortgage amount and term had changed, both of their incomes had increased quite considerably, and they now had 3 young children. They wanted to ensure that their family would be financially secure if either of them was unable to work due to a serious illness/injury, or if either of them passed away.
Recommendation
Our protection specialist carried out a comprehensive review, assessing their existing cover, current risks, and priorities, in line with their budget. We made the following recommendations:
- Protecting the mortgage in the event either of them passed away
- Protecting their income in the event one or both is unable to work long term
- Protecting their family to provide a regular income in the event either parent passed away prematurely
We had to work within their set budget and put in place the following:
- Decreasing life insurance policy to pay off the mortgage in full if either of them became terminally ill or passed away
- An Income Protection plan for each of them covering 60% of their current salaries, protecting them until their planned retirement age, with both policies set to pay out when their employee sick pay ends
- A Family Income Benefit policy for family protection. The policy was set up to protect them in the event either parent passed away, with the policy paying out £2,000 per month until the youngest child is age 23. This policy would help make up for a portion of the lost salary should either parent pass away while the children are young, ensuring they can continue with their current lifestyle while adjusting to a one salary household. We also added children’s critical illness cover of £25,000 which would pay out should any of the children suffer from a critical illness. This only increased the premium by a very small amount and it gives the parents comfort that should any of their children suffer from a serious illness that a pay out could help with treatment, or if one of them had to be off work long term (potentially unpaid) to spend time caring for their sick child.
Outcome
With the right protection in place, this couple have complete peace of mind that should either of them pass away, or if either of them is unable to work long term due to illness or injury, that their family will be financially secure.
Together, these three types of cover create a comprehensive shield around their mortgage and their future, giving them peace of mind and long-term financial security.
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