All too often private landlords view life assurance protection on their investment property mortgages as a luxury rather than a necessity. Lenders do not always insist upon it, as the property will often be used as security in the event of the death of the landlord, and the natural assumption for many is to assume that the estate would sell the property to clear the mortgage.
F or a single landlord with the reasons behind why the investment was made in the first place. If a property investment was intended to generate a regular income or to help in retirement by providing security for the family’s financial future, then the question needs to be considered of what happens in the event that the landlord were to fall ill or die prematurely? Life assurance plans can be an effective way of ensuring that a mortgage can be repaid and therefore allow the property to pass (debt free) on to the beneficiaries of the landlord’s estate, thereby providing a level of security for the dependants. To Be or Not To Be? “Covered” that is no dependants this may well be the case, however for a landlord with a family, attention needs to be paid to
While the issue of managing an estate after death is an inevitability which many investors choose to tackle when investing in property, what can be more difficult to predict is unexpected illness or incapacity. No one likes to think of what might happen if they were to become ill, but according to a recent report by Legal & General one in five people in the UK will suffer a serious illness before retirement. One way of managing this exposure is to take out critical illness cover. Critical illness policies can help in the event of a landlord being diagnosed with a serious illness, disability or in need of an operation. By extending a life policy or taking out standalone critical illness cover, it is possible to arrange for a lump sum to be paid in the event of serious illness which could help to repay
a mortgage, cover associated medical costs or help to bridge the income gap if one or more properties were to be vacant when the landlord is ill. As with any health related policy there will be limitations, so before you take out critical illness cover you should discuss your needs with a professional adviser. Being mortgage-free on your investment properties can provide financial security at a time when you need it most and help to secure future income if you are no longer able to work.
If you would like to talk through some of the ways to set up a life assurance plan, or to add critical illness cover to your existing policies, contact Tim Bell on 01206 838457 or email tim.bell@scruttonbland.co.uk
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