Why it’s a good idea to review financial protection when remortgaging
If you’re looking to remortgage then it’s also a good time to review your finances. Since your last mortgage deal, a lot of things might have changed in life.
One area worth reviewing is your financial protection. No one wants to have problems in the future. It’s something few people enjoy talking about it – but it’s something you cannot ignore!
And it’s not just for those who are getting close to retirement age!
A government report released in March 2025 states that people under the age of 35 are increasingly facing health issues. In particular, mental health issues are rising. And this is leading to more young people needing to leave work.
It proves that having financial protection is sensible – even if it seems unnecessary at the moment.
The Association of British Insurers released data in July 2025 that states a record £8 billion was paid out in financial protection claims in 2024. That shows how many people have experienced unexpected issues.
So, what kind of financial protection should you be thinking about? You don’t have to review it when remortgaging, of course. But as you’ll be reviewing your finances anyway, it’s a good time while you’re in the right frame of mind.
How financial protection can help
Taking out financial protection gives you the peace of mind that if something unexpected happens your finances don’t get completely hit. If you’re a homeowner, you must pay your monthly mortgage and/or interest. Failing to do so could mean your home is repossessed.
While it sounds a bit rough, you must remember that when you sign up to a mortgage you’re legally agreeing to keep paying the agreed amount.
Taking out the right protection can mean you don’t have that stress while you’re dealing with your other issues.
And as we’ve said before, such protection isn’t just for older people!
A report in the IFA magazine shows that 14% of mortgage holders aged between 18-34 would immediately struggle to meet mortgage payments if they lost their income due to sickness or injury. More than half (57%) said they would be in difficulty within six months.
What financial protection is available?
Income protection. If you can’t work because of an accident or illness, protecting your income can help. It pays a regular income until you can get back to work, retire or until the agreed term ends. It usually covers a portion of your salary. For example, 65%. This means that you should have enough to cover financial commitments, such as mortgage repayments. The ABI data shows that the average amount paid through income protection was £25,133.
Critical illness cover. Being diagnosed with a critical illness is shattering. The last thing you want to worry about is meeting mortgage payments. If you’re unfortunate to be given a diagnosis, critical illness cover will help by paying out a lump sum. You can use it as you wish, including covering time off work or making adaptions to your home. But many people use it to pay off some of their mortgage to reduce monthly payments. The average amount claimed, according to the ABI, is £68,735. In some cases, such an amount could be enough to pay off a mortgage to give real peace of mind.
Life insurance. This pays out a lump sum to your beneficiaries if you die. This can help give your loved ones some financial security while they cope with your passing. You choose which level of cover you wish. Some people opt for an amount that pays off your mortgage so you don’t leave that issue to your spouse or family.
Family income benefit. This is useful for parents, those with partners and spouses and those with other dependents. It provides a payment each month to replace your monthly earnings. It is helpful if you have financial dependants, including siblings or your parents. It is not suitable if you want your mortgage to be paid off if you pass away. It mainly covers day to day expenses.
Self-employment cover. Being self-employed can be a real burden because if you can’t work, your income will be affected. There is a range of protection for people who work for themselves. This includes accident and sickness cover, accident, sickness and unemployment cover as well as income protection insurance.
What should I do next?
Before you start looking for financial protection, check you haven’t already got cover in place. You can also check your employer’s sick pay policy. If they only offer Statutory Sick Pay – £118.75 a week – you may struggle. But if they offer enhanced sick pay, you may find that’s enough to cover your circumstances.
If you’re unsure, then contact our team today. We can guide you through whether you need financial protection and what’s best for you.
