Any homeowner should ask themselves if they would be able to continue to repay their mortgage if they were to become unable to work after suffering from an accident, suffering an illness or faced involuntary redundancy. In most cases, the answer would be that they would not be able to cope financially. For those who would be eligible to claim, a mortgage protection insurance policy could be their lifeline.
The majority of homeowners think they would we able to live on their savings or that the State would kick in and help out. However, savings would soon dwindle if you were to be out of work for months on end and the financial assistance the State offers - even if you are entitled to receive help - is very little. Providing you have checked the exclusions in a policy then mortgage protection insurance can be a very valuable lifeline.
Mortgage insurance can be taken out for a premium each month which varies between providers and is based on your age at the time of taking it out and the amount of your monthly mortgage that you wish to insure. You do have to read the exclusions in a policy because the cover is not suitable for the circumstances of all individuals. Common exclusions include being self-employed, suffering an ongoing illness, being of retirement age or if you only work in part time employment. There can be others attached by the provider so it is essential that you do read the small print.
If a policy is suitable for your circumstances then it could begin to payout once you had been out of work for anywhere between 31 and 90 days, this is stated in the small print. Once it has commenced you would receive a tax free income each month which means that you would not have to struggle when it comes to repaying the mortgage and related outgoings such as insurance each month.
Mortgage protection insurance along with other payment protection products have earned themselves a bad name and have caused much confusion which has caused a drop in the amount of policies being sold. However it is not the actual cover itself which is to blame but those who sell it with little knowledge regarding the products. When bought from an independent specialist provider you can be sure that the cover is sold by qualified staff and is your policy is backed up by experience in the payment protection business.
A specialist provider will give you access to the vital information you need to determine if a policy is suitable for your circumstances. Along with this they will offer the cheapest quotes for the premiums which make mortgage protection insurance affordable for everyone. Despite the many faults and ongoing investigation by the Financial Services Authority, mortgage protection insurance is worth considering when you take into account that it could mean the difference between you losing the roof over your head by getting behind on your mortgage repayments or keeping it.
by Simon Burgess
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