financial services

It is important to understand what life insurance means. This will help you make an informed decision on what’s best for you and your family, and consider a budget which is affordable.

Life insurance is a policy which will pay out if you pass away within a certain period of time. You pay a monthly sum to the insurance company and the cost is based on a varying factors which include:

• The level of cover you need (sum assured)
• How long the policy will be protecting you and your family (term)
• Your current age
• Your current health status and your immediate family’s health status
• Whether you smoke or not
• Your lifestyle (including any dangerous sports or activities you take part in)

There are different types of life insurance policies available which will also have an impact on cost as they offer slightly different benefits:

Decreasing Term Insurance

Also known as mortgage protection, this policy is designed to protect the remaining balance of your mortgage at any point during the term.  The level of cover reduces in line with your mortgage and leaves no family protection if you were to pass away during the term of the policy.  It is considered the most economical way to protect your mortgage and ensures your family will keep their home if you pass away prematurely.

Term Life Insurance

Term life Insurance lasts for a pre-defined period of time which can coincide with financial commitments such as mortgages, the age dependents should be financially independent.  If you pass away within that period of time, the policy will pay out.  If not, the policy term will expire and you will no longer pay the monthly premiums or be protected by the policy. As they have a predetermined expiration date, the policies tend to be less than a whole of life policy.

Whole of Life Insurance

This type of life insurance will cover you until you pass away, whether that’s in 10 years or 50 years.    As this is a guaranteed payout from the insurance provider, the cost is higher than a term assurance policy and usually ideal for smaller sum assured such as funeral costs rather than mortgage or family protection.

Critical illness protection pays out a lump sum, or monthly payment, if you are diagnosed with a critical illness within the term of the policy.  What illnesses you are covered for depends on the provider and when the policy was put in place. The minimum criteria a policy has to cover in relation to the illnesses covered is set by the Association of British Insurers.  Some providers cover more illnesses than the minimum required and some providers enhance these definitions to pay out at a less severe stage of illness. The best policies are not always the most expensive, so it’s advisable to speak to a protection specialist to find the most suitable cover you and your family.

It’ also important to note that providers do upgraded their policy reasonably often and improve their definitions to keep up with the nation’s health, but you will not automatically get upgraded to the new policy, you have to reapply and completed the medical questionnaire again, which enables the provider to complete a further risk assessment. It is important to have the policy reviewed every few years to keep up with the changes on the market, or changes in your personal circumstance.

The varying factor which predict the cost are the same as life cover:

• The level of cover you need (sum assured)
• How long the policy will be protecting you and your family (term)
• Your current age
• Your current health status and your immediate family’s health status
• Whether you smoke or not
• Your lifestyle (including any dangerous sports or activities you take part in)

Decreasing Term Critical Illness Cover

Also known as mortgage protection, this policy is designed to protect the remaining balance of your mortgage at any point during the term.  The level of cover reduces in line with your mortgage and leaves no family or personal protection if you were to be diagnosed with a critical illness during the term of the policy

Level Critical Illness Cover

Term life Insurance lasts for a pre-defined period of time which can coincide with financial commitments such as mortgages, the age dependents should be financially independent. If you are diagnosed with a critical illness within that period of time, the policy will pay out.  If not, the policy term will expire and you will no longer pay the monthly premiums or be protected by the policy.

Option Extras

Optional extras are available at an additional cost and will very from provider to provider. These include:

• Fracture cover
• Children’s’ Critical Illness Cover
• Global Treatment
• Extra Care cover
• Buy back options’

Income Protection protects your income from being unable to work due to accident, sickness or disability. The policies will protect you for up to 70% of your annual salary and commonly a product people wrongly assume will be expensive. The cost can suit every budget as the options for the cover can be adjusted to suit.

These options include:

• How long you would like the policy to pay out. – This can vary from 12 months to retirement age.
• The level of cover you would like. – Although you can be covered for 70% of your salary, covering a lesser amount will make the policy more affordable.
• What age you would like to take the policy too. – This can be tied in with mortgage expiration dates, retirement or until your children are financially independent.
• Your occupation. –  Jobs with a higher risk of injury are usually more expensive.
• When you would like the policy to pay out. – You can have a deferment period on the policy which dictates how long you would need to be off work for before the policy would pay out.  This can be set for when you no longer receive sick pay from work, or if you do not receive sick pay, how long you think you could cope financially without have to receive some help.  This period can range from 1 days – 24 months.

Additional options

The policies can have a guaranteed sum they will pay out and a guaranteed premiums but further option include:

• RPI linked. – The level of cover will increase year on year with RPI. This also means the cost of the policy will also increase.
• Age costed. – As your age the monthly cost will increase but the level of cover does not.
• Budget protection. – A policy that does not cover you until retirement, rather a shorter period of time such as 12 months.
• Fracture cover. Available with some providers

Income protection insurance is ideal for the self-employed and I the most important insurance to consider if becoming self-employed.

When you are self-employed you do not have access to sick pay or insurance cover provider by an employer.

A reduction in income would not only affect your family’s financial situation but also that of your business if you are unable to pay the monthly bills that still need settling.

An income protection policy for the self-employed would provide an income if you are unable to work due to accident, sickness or disability.

If you become sick and do not have cover in place you would have to live on unemployment and support allowance in order to pay your bills.

While your claim is being assessed

You’ll normally get the ‘assessment rate’ for 13 weeks while your claim is being assessed.

This will be:

• up to £58.90 a week if you’re aged under 25
• up to £74.35 a week if you’re aged 25 or over

If it takes longer than 13 weeks to assess your claim, you’ll continue getting the ‘assessment rate’ until you get a decision. Your ESA will be backdated if you’re owed any money after 13 weeks.

After you’re assessed

You’ll be placed into one of 2 groups if you’re entitled to ESA. If you’re able to get back into work in the future, you’ll be put into the work-related activity group. Otherwise, you’ll be put into the support group.

You’ll get:

• up to £74.35 a week if you’re in the work-related activity group
• up to £113.55 a week if you’re in the support group

It’s important to ask yourself if you and your family could survive financially on the above.

Yes! And the numbers are high!

99% of life policies paid out – £128,000,000 with Scottish Widows

93% of critical illness policies paid – £84,000,000 with Scottish Widows alone

Here are the Myths…

Myth 1

“It never pays out”

People vastly underestimate how many claims get paid. 

98% of all claims Scottish Widows received last years were paid out.

Myth 2

“It wont happen to me”

Even young, fit and healthy people can unexpectedly fall ill, or worse. Last year the youngest life claim with Scottish Widows was for a 23 years old, and the youngest adult critical illness payout was only 24.

51 years old is the average age of Scottish Widows critical illness claims last year.

Myth 3

“I can’t get cover with a pre-exiting condition”

Pre-existing conditions are less of an issue than your clients may think. They may not even increase the cost of the premium.

96% of clients who tell us about mental illness are offered life cover with 80% accepted on standard terms.

Myth 4

“The state will look after me”

How much are your monthly outgoings? State provisions are not enough to cover the cost of everyday life. Can you live on £74.35 per week?

20% would rely on State Benefits if they became unable to work for longer than 6 months.

Myth 5

“I’m covered through work”

While some cover is better than none, its important to check that any cover your client have meet their needs.

61% of people have no financial protection equivalent through their employers

* Source: Scottish Widows claims statistics 2019

UK Health Statistics

• 5 million people living with cancer in the UK
• 4 out of 5 people with cancer may incur additional expenses of up to £570 a month because of their illness
• 363,000 new cases of cancer in the UK every year
• Every two minutes someone in the UK is diagnosed with cancer
• Every 5 minutes someone is admitted to a UK hospital due to a heart attack
• Around 1.5 million men and 830,000 women in the UK living with coronary heart disease
• There are more than 100,000 strokes in the UK each year – a stroke at least every 5 minutes

Around 1.3 million people living in the UK have survived a stroke or transient ischaemic attack (TIA)

Sources: Macmillan Cancer Support, 2019 Cancer Research UK

A Lender or a bank loans money with interest. Their loan is secured with a legal charge against the value of a property. The details of the loan agreement are registered against the Title of that property- this is known as a mortgage.

Brokers are specialist mortgage advisors who look for an appropriate mortgage product on a client’s behalf to ensure they get the best deal possible. Fees and rates differ from one broker to the next, as does success, so it is wise to use the services of an experienced broker to get the most attractive product.

Here at TF Financial our advice is always independent and without bias, our advisors recommend what they consider to be the best mortgage to meet your needs. You can be assured that you are getting the best advice from our advisers. Our advisors are well trained, CeMap qualified, FCA regulated and offer professional advice.

There are two main types of mortgages;

Fixed Rate Mortgage and Variable Rate Mortgage. If we arrange a fixed Rate Mortgage, it means that your interest amount is fixed for a period of time, in general two to five year, your repayments don’t alter during that period.

A variable rate mortgage means the interest you pay can change, so in turn your payments could fluctuate.

A Fixed Rate Mortgage means that your interest amount is fixed for a set period and your mortgage payments will also remain the same for this period. A variable rate means the interest rate can fluctuate and are not set; therefore, your mortgage payments can also change.

Bad credit does not automatically exclude you from getting a mortgage. We have great success in helping clients with adverse credit. This is achieved by reviewing the whole of the market and having in-depth knowledge of lenders specific credit criteria. We then select the most appropriate lender to fit your application.

We provide “whole of market” advice this means that we can access the best mortgage deals from the whole of the market. This in turn allows us to compare the whole market on your behalf to ensure we find the best available offer for  you.

Certain costs can be incurred when taking out a mortgage. For example, a lender may charge an Arrangement fee on a product or an upfront fee for the valuation of the property for another. When selecting an appropriate scheme, a holistic approach is used to ensure that the most cost-effective deal is selected.  To ensure transparency any fees will be detailed on the documentation provided prior to any commitment by the client.

Each lender has different criteria in what they will deem affordable. The amount you qualify for will be determined by factors such as purchase price of the property, the deposit you are able to put down, your income and monthly expenses. We gather the relevant information pre application to determine your potential borrowing.

LTV is an acronym for Loan to Value Ratio. This is a term used to describe the ratio of a loan to the value of the property purchased. For eg if you borrow £170,000 to purchase a property valued at £200,000 the LTV is 170,000/200,000 or 85%, the remaining 15% is your equity. Generally speaking the lower your LTV the better rates, you will have access to.

With a repayment mortgage, every month you pay back both the interest on your mortgage AND some of the loan itself. With an interest-only mortgage, you only pay back the interest on your loan. This means your monthly payments are much lower, but you will still need to pay off the loan at the end of the mortgage term

Yes, we have many years’ experience with Buy to let mortgages.

Affordability is based on your annual income and outgoings. It is in your best interests to get advice and a decision in principle prior to going ahead with your final plans for your mortgage . Both to ensure you can obtain he lending you require and also that your credit profile will support you achieving your goals.