The key issue for Kelly and Ian to balance is their comfort zone between their expendable income and...
The key issue for Kelly and Ian to balance is their comfort zone between their expendable income and protected income. The mortgage commitment that they have is pretty full and this is topped up by a significant five-year loan that is not asset backed.
They need to consider how they would continue to meet their mortgage and loan repayments should either of them become unable to work as a result of illness or an accident. Income protection (IP) would be advisable and at a time when they are starting out and wanting to keep outgoings to a minimum, they could consider covering only the monthly repayments to both loans, with a view to perhaps paying £15.71 per month for them both to be covered for IP on an own occupation basis for 25 years.
With liabilities such as theirs it would be worthwhile for them to think about life and critical illness (CI) cover to protect each of the loan amounts ' £8,000 over a five-year term and £126,000 over 25 years. These benefits, along with the IP can all be set up in the same policy and would cost £67.56 per month, with Scottish Equitable Protect.
When they decide to start a family, a review of their protection portfolio would be recommended to ensure that additional liabilities and plans for the future are taken into account, ensuring they are not underinsured. At this time they could make use of the guaranteed insurability options automatically included, which enables them to increase cover, within certain limits, without further underwriting.
