Mortgage Protection Insurance
This is a Mortgage Payment Protection Insurance policy you can use to protect your monthly mortgage payments if accident, sickness or unemployment prevent you from working.
You can cover 100% of your mortgage payments, plus 25% extra for your mortgage related insurance such as mortgage endowment, life insurance or buildings and contents insurance.
Mortgage Protection info
From only 71p per £100 pm benefit, Click here for quick quote
Why should I have Mortgage Protection?
Many people buy Mortgage Protection Insurance at the time they are sold their mortgage. It is an "add on" by the mortgage company that more often than not is poorly explained and highly priced. The purpose of this is to pay you a monthly benefit equivalent to your monthly mortgage payments in the event you lose your income through accident, sickness or unemployment. The Competition Commission, acting on a complaint by the Citizens Advice Bureau, are now looking to require banks and building societies to inform their customers they do have the option to buy their cover from an independent provider, or as they are sometimes called, "standalone providers". This means that they are providing your payment protection independently from your mortgage.
If you are fit, in a good job and life is being kind to you, protecting your mortgage is possibly not something you would consider a priority. After all, losing your job is something that happens to "the other guy". Unfortunately in these difficult financial times this is becoming less and less likely and there is a real possibility that it may happen to you.
The threat of losing your home is a distant threat, but nonetheless, within a very short space of a time could become a reality. If you lose your income through accident, sickness or unemployment how would you realistically continue to pay your monthly mortgage repayment? The first thing you might think is the Government would step in. You would be wrong. Even if you were to qualify for State help they would only cover the interest on the first £100,000 of your mortgage. If you took out your loan after September 1995 you will have to wait 39 weeks to get any help, for older mortgages they will only start paying out after eight weeks and for the next 18 weeks they would only pay half of your interest payments.
Unless you had substantial savings, sudden loss of income through accident, sickness or unemployment, could mean that the roof over your head would be in jeopardy within a very short time of your income stopping.
One such way to prevent such a catastrophe would be to have Mortgage Protection as this would pay you a tax free monthly amount, equal to your mortgage repayments, for a specified period of time giving you the "breathing space" to recover from illness or find new employment. However it is important you understand the product and what it does, in order that you buy the correct amount of cover and a premium that is affordable to you. Remember you are not obliged to buy payment protection from your provider and your failure to buy it should in no way reflect on the grant of your mortgage.
All policies are essentially the same but many come with variable factors to allow you to tailor the policy to suit your particular requirements and financial circumstances. You may choose the number of months you wish to consecutively be paid, this choice is usually from 3 up to 24 months. There is also a "waiting period", this is the length of time you must be without income before you can make a claim. You may choose when you want the benefit payments to start and again this can vary from Back to Day 1, this means you apply on the 31st day of loss of income and it is backdated to the first day, or you can choose to delay the payments for anything up to 12 months.
You would have to supply evidence of your unemployment and this usually means providing evidence that you have signed on at the JobCentre Plus or provide a doctors certificate showing you are not able to return to your work. This would need to be provided monthly to the underwriters who in turn would then pay you your monthly benefit to enable you to continue payments for your mortgage.
There is nearly always an "exclusion period" for payment protection policies. This is the length of time you must wait after you have taken out the policy, to make a claim for unemployment. It is variable but ranges from 3-6 months depending on your provider. An exclusion period is usually just a one time only event and is always at the start of the policy and again varies form provider to provider. It is there to protect the underwriter from applicants who know that redundancy is coming and therefore take out a policy immediately beforehand.
As with any insurance policy there are Terms and Conditions and these should be read and understood before you make such a purchase. Buying payment protection from your mortgage provider quite often means that you do not have sufficient time to read the Terms and Conditions whereas if you go to an independent provider, particularly on line provider, you can ensure that the policy is right for you.
Whether you need Mortgage Protection is a personal choice but if you consider the investment you make into buying your home initially and the improvements you make on it, keeping it safe in difficult times should be a priority. The relatively small premium to provide such peace of mind is easy to obtain so long as you shop around and buy the product that is right for you.