With the bad publicity which has recently surrounded payment protection insurance products, many homeowners are wary of taking out mortgage protection which is leaving them wide open to losing the roof over their head if they were to suddenly find they lost their income.
Mortgage protection can give you an income with which to continue meeting your monthly mortgage repayments if you should come out of work due to suffering from an accident, illness or if you should become unemployed. While there are problems within the sector and there is much confusion as the products are not differentiated between mortgage protection can be a very worthwhile product. You do however have to ensure that it is suitable for your circumstances before you take out the cover and this is because there are exclusions which mean it is not suitable for all individuals.
While exclusions can vary depending on the provider there are some that are common to all policies. Being self-employed, retired, only in part time work or suffering an ongoing illness would mean it would not be suitable for your circumstances. You do have to check the small print for additional ones and to find out about the terms and conditions of the policy because these too can vary.
Policies will usually begin to payout between day 31 and 90 and then continue for between 12 and 24 months depending on the provider. Premiums for mortgage protection can vary greatly too and going with an independent specialist provider will get you the cheapest premiums for the cover. The premium will be based on your age at the time of taking out the policy and how much your monthly mortgage repayments are.
A specialist provider will also have the experience when it comes to selling the products which means you can benefit from their experience by way of reading articles and facts regarding the insurance they sell. They will also give you the key facts document and explain the exclusions in plain English so that you are able to make a decision before buying. Ignorance of the exclusions is what caused the majority of mis-selling and it is hoped that in March 2008 buying mortgage cover and payment protection related products will become easier.
The Financial Services Authority is introducing comparison tables which it is hoped will take some of the mystery out of buying cover. The consumer will be able to answer a series of questions which depending on the answers will lead them to buying the most suitable type of cover for their needs. Along with this the tables will explain the exclusions which exist in the policy and how much in total the cover will cost. Cover needs to be made more transparent if mis-selling is to stop and right now the only thing in the favour of the consumer is an independent specialist. Never be tempted to take out the cover that is offered alongside your mortgage at the time of taking it out, you do not have to buy it this way, you can choose to go independently for your mortgage protection cover.
by Simon Burgess
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