Protection for landlords – key takeways from our Annual Conference
We thought we’d take the opportunity to summarise some of the key takeaways from our Annual Conference last week, concerning protection for landlords and what the consequences may be for the beneficiaries of landlords who do not have any or adequate cover in place. Just before we do though, we’d like to highlight just how cheap it is currently for landlords to protect their investments.
Here’s a few life cover quotes based on a 40-year-old landlord, non-smoker, on a 20-year level term.
£100k – £8.26pm £500k – £29.78pm £1m – £54.48pm
Based on the rental that will be received, this is a minimal cost for landlords. Also, if they do decide to put their portfolio into a limited company, this is tax deductible.
Every landlord needs to consider the financial consequences of serious illness, long-term incapacity or death. Landlords are resting on their laurels, believing that they, or a beneficiary, can sell their properties if needed. This may not be a viable option if the property value has decreased, which could happen in the current turbulent market – particularly in London. Furthermore, the property investments a landlord holds could be a core part of their family’s long-term financial security and possibly retirement income. These needs will still exist and it will, therefore, be more important than ever to hang on to these valuable assets and not be forced to sell them through financial necessity.
Also in many cases, landlords may have borrowed in their sole name and would like to leave their properties to a family member. In the event of death, a mortgage lender will call in loans, meaning beneficiaries will need to sell the property, refinance or negotiate a new deal with the lender. As mortgage interest rates are due to rise by up to 3% by 2020 and affordability has been greatly tightened, the latter two options may not be possible. By having adequate protection in place to clear mortgage payments, it will ensure those who matter most have the option to sell the properties or continue to run the investments, benefitting them for years to come in the long-term.
Policies in Trust
Another crucial consideration is whether the beneficiaries on the policy should be written in trust, as this will allow the client to stipulate who their money will be paid to on death as opposed to their estate as a whole. A policy written in trust may also mitigate the effects of inheritance tax* and may assist the life insurance company to pay out faster. View our Writing Policies in Trust FAQ for more details.
If you come across any landlords without adequate cover in place, then send us their name and number and we will be happy to send them a free no-obligation whole of market quote. If the client wishes to proceed then on completion, Ingard will pay you a handsome share of the commission received.
Have a case to discuss? Call us on 01702 538 800 or request a call back.