12 Aug 2014

Cappuccino, Americano, or Protection Cover?

Cappuccino, Americano, or Protection Cover?

Paul Gregory, Independent Mortgage Advisor, puts the cost of protection into perspective.

Paul Gregory, Independent Mortgage Advisor, puts the cost of protection into perspective.

Recent media articles have focused on the high number of homeowners who are at risk as a result of not taking out any form of financial protection.  People often say they often can’t afford protection. They don’t believe they have money to spare. 

If you have purchased your first home for example, it may have taken some time to save the deposit and that adds up to a lot of time, money and effort. 

For example:

5 years is how long it might take a first-time buyer to save for a deposit*1

£129,441 is the average cost of a first home*2

£29,400 is the average deposit put down by a first-time buyer*3

What do you have to lose?

A recent study from Friends Life found that over half of mortgaged residential homes in the UK are not protected by any form of protection insurance – things such as life insurance, critical illness and income protection cover. 

As a result, if you were to develop a critical illness and couldn’t pay the mortgage, there’s the house, the deposit and your credit rating to lose.  That’s why it pays to protect yourself.

Assessing your protection requirements is absolutely essential to safeguarding your home, your family and your own well being.

How much would it cost?

Based on a male, non smoker 27 years old, taking life with critical illness cover of £129,441 over 25 year period, reviewable rates  the cost is approximately £25.00 per month 

When you consider the odd little treat, like your favourite coffee, can soon become a daily routine.  It may be worth stopping to consider the cost of a daily cappuccino each month could cover the cost of the life and critical illness cover.  (based on average price of a cappuccino £2.50 from UK coffee menus January 2014).

Paul Gregory, Independent Mortgage Advisor

*1:  www.moneysavingexpert.com, assuming £200 saved each month for a total deposit of £12,944

*2:  Halifax House Price Index 2013

*3:  HSBC research, February 2014


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