- Clients: British nationals residing in Bahrain
- Property: UK family home
- Requirement: Life insurance to protect the mortgage
- Structure: Decreasing life cover written into a discretionary trust
Enness was approached by British nationals living in Bahrain who were looking to purchase a home in the UK. The property was intended to become their permanent family residence as they planned to move back to the UK, while also providing a long-term home for their children.
As part of the wider financing arrangements, the clients wanted to ensure that the mortgage would not become a financial burden for their family if either of them were to die during the term of the loan. Life insurance was therefore considered as a way of providing a lump sum that could be used to repay the outstanding mortgage.
The clients’ residency presented an immediate challenge. As they were living outside the UK, many providers were unable to offer the type of cover required. Enness reviewed the available options and identified a provider that was comfortable with their circumstances.
The resulting policy was structured on a decreasing basis, broadly matching the outstanding mortgage balance over time. This meant that the level of cover would reduce as the mortgage was repaid, with the intention of providing sufficient protection to repay the outstanding borrowing in the event of death, subject to the policy terms and conditions.
The policy was also written into a discretionary trust. This structure was intended to provide greater control over how the policy proceeds would be dealt with and could have potential estate planning benefits, depending on the clients’ individual circumstances and the applicable tax rules.
For the clients, the arrangement provided additional reassurance that their family would have a means of addressing the mortgage if the unexpected happened. It also demonstrated the importance of considering protection alongside a property purchase, particularly where a family is relocating internationally and the property is intended to become their long-term home.
The case highlights how finding appropriate life cover can be more challenging for clients living overseas, particularly when they are purchasing property in the UK. A specialist approach can help identify providers that are comfortable with the client’s residency and the level and structure of cover required.
If you are purchasing a UK property while living overseas and would like to explore mortgage protection options, speak to an Enness specialist to discuss your requirements.
Disclaimer:
Enness does not provide general insurance advice or recommendations. Enness Insurance Brokers is a trading style of Vizion Insurance Brokers Limited, which is authorised and regulated by the Financial Conduct Authority under firm reference number 751098. This case study is based on a real scenario and has been anonymised and generalised to protect the identity of those involved. Insurance is subject to insurer assessment, policy terms, conditions and exclusions. Trust and estate planning arrangements can have legal and tax implications, and clients should seek appropriate professional advice based on their individual circumstances.
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