Mortgage Protection Insurance Solutions for a 50+ year old father

THE SCENARIO

At Enness we don’t only cater to the mortgage interests of our clients. Once our clients have completed on a mortgage they are referred to me, the resident Protection Adviser here at Enness. This is because protecting your main asset is a vital counterpart to obtaining an expensive mortgage, should the worst happen, you don’t want to add to your family’s burdens. I know that mortgage protection insurance is not the most exciting topic but here at Enness we try and make it as smooth as possible!

This case study explores how I helped a client who had amassed significant assets over the years through various entrepreneurial business activities. This client is similar to a number of our clients so hopefully you will be able to relate to both the circumstances and the mortgage protection insurance solution we delivered to him.

My client was in his 50’s. He felt he was not yet ready to engage in tax planning and his intent was to continue growing his wealth. However, he had a potential Inheritance Tax liability of c £5 million and required the comfort of knowing that, should he die, this will be paid and his family will not lose the benefits of his hard work to taxation. For this reason he was interested in exploring all mortgage protection insurance options I could offer him.

OUR SOLUTION

During my initial brief mortgage protection insurance consultation I established one of my client’s main concerns was for his three children. He wants them to benefit fully from his estate.

I presented him with many options from an insurance point of view, including:

–          Whole of Life cover (a policy guaranteed to pay out whenever you die, in contrast to more common term insurance cover which covers a specific period)

–          Rolling term assurance (Term assurance with a fixed premium increase every 10 years and no further underwriting required)

–          Term assurance (Life cover over a set number of years)

Various premium options were considered too, including a single premium at £1.2 million (option to pay all premiums in one go; this money is then invested by the insurer to recoup their potential (or certain) liability.  This is part refundable if the policy is cancelled; the amounts refundable are set in advance). The client decided to take a whole of life policy and now has the comfort of knowing his tax liability (as it is at present) is covered by mortgage protection insurance.

He will consider various forms of tax planning and trust structures in future but wanted an initial ‘fix’ for the problem, which we provided.