What protection do first-time buyers need?

When first-time buyers are taking their opening steps into homeownership, protection may not be at the top of their mind. But discussing cover with an adviser is an important step in the mortgage process. This is the ideal time to ensure all possible circumstances are covered, to protect against worst-case scenarios.

Essential cover

Some protection is mandatory for lenders, such as building insurance. Other insurance is common sense, such as including contents insurance as part of your plan. But this is not the same thing as being “essential”. An adviser will look at each person’s circumstances and their budget, then explore any scenarios that would leave them in a financially or emotionally difficult situation.

Life insurance can help to pay off the mortgage and protect loved ones from losing their home. But what about all the other bills and goods that a family requires? What about the time the spouse will need to spend with children during a difficult time? This may not be covered by life insurance alone, especially if the remaining spouse is forced to increase their work hours to compensate for the drop in income.

Suitable cover

A key consideration when an adviser reviews your protection needs is ensuring the cover is appropriate for your situation. For instance, it could be argued that for a single adult with property-owning parents and no dependants, life cover may not be the best option. Instead, a menu plan solution including critical illness cover and income protection, is more likely to provide the long term security you would need during the mortgage term. The value of cover has increased, as the likelihood of being unable to work or being diagnosed with a critical illness is higher.

A person with a young family to look after will almost certainly need some form of life insurance. Furthermore, it is important to consider family income benefit, which can provide secure and long term payments to the family left behind to cover the mortgage and help with other costs. Some providers also offer free life cover for the first year you have a new born child, as well as benefits such as counselling services and health and legal advice.

If you would like to find out more on cover for first-time buyers, talk to us today to arrange a meeting with our adviser.

Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income.