Bill has enough capital to pay his bills for at least three or four months ' after that he would be ...
Bill has enough capital to pay his bills for at least three or four months ' after that he would be in serious financial trouble. He has two options to cover his mortgage payments, either to set up a policy with his lender or to set up an income protection (IP) policy.
If he was a sedentary man I would always recommend an IP policy, with the option of redundancy cover if he thought his job was at risk. But there is an added risk from his outdoor pursuits when he is in danger of falling off cliffs or mountains with the potential of a bad accident and a claim on his policy.
From the insurer's point of view, mortgage protection from his lender has finite value, the policy will only pay for 12 or 24 months, which means their underwriting is fairly relaxed. Halifax makes no restrictions and will pay a claim under normal policy conditions whatever the reason.
Other lenders take a different view. Cheltenham & Gloucester will only give unrestricted cover for the first six months and will underwrite at that time. So now Bill is insured and now he is not.
Long-term cover is more restricted. Underwriters do not like added risk and they deal with it in a couple of ways, either by increasing the premiums or excluding any claim from these activities, keeping the premiums low. This is clear and Bill will know he has insured his income during his day-to-day life and at the times of taking part in his hazardous pursuits he is uninsured. It is up to him when he climbs, and perhaps his uninsured state will add to the thrill of the climb.
