Far too many people don't consider how they will cope in the event of an accident, period of illness or involuntary unemployment until it actually happens to them. Unless that person has sufficient investments and savings, any one of these different scenarios could make it impossible to pay the mortgage. As a lot of homeowners have found out to their cost, failing to take out mortgage protection insurance could result in mortgage repossession. For the cost of a modest monthly premium, this problem can be averted which gives that person time to recover from ill health or find a new job.
What Does Mortgage Protection Insurance Offer?
A mortgage protection plan provides a sum of money each month for a defined period of time (normally for up to 12 months) or until the insured's personal circumstances improve. In order to provide an incentive to return to work, no policy will provide the full amount of lost income. It will normally specify a monetary and/or percentage of gross income figure. Although it will normally take 30 days to receive payment, any payment will be backdated to the first day of the claim.
When is a Mortgage Protection Plan Inappropriate?
Although mortgage protection cover will help the majority of people, it isn't suitable for everyone. Whilst the terms and conditions of a policy will be far more specific, the following categories will not benefit:
- Any individual who is in temporary employment contract or still in their probationary period.
- Someone with a pre-existing medical condition for which medical advice or treatment has been sought in the last 12 months.
- Voluntary unemployment or dismissal due to misconduct.
- Any injury that is self-inflicted or due to alcohol or drug abuse.
- Those who are under 18 or above the statutory retirement age.
Ways to Get Cheap Mortgage Protection
- Take out coverage as early as possible. The younger the person, the cheaper the policy.
- Use an online comparison service or independent broker to trawl the market for the mortgage protection plan that offers homeowners the best value for money.
- Use personal savings in order to decrease the period of deferment.
- Pay annually, not monthly as annual policies tend to be cheaper due to less administration.
- Purchase several forms of coverage collectively (home, life and car) from the same provider in order to enjoy an additional discount.
Is Mortgage Payment Protection Essential?
Unlike critical illness insurance or Income Protection Insurance (IPI), a cheap mortgage protection plan isn't deemed essential. This is because the policy will only cover someone for a maximum period of about 12 months. There is normally a re-qualification period following the original claim as well. Those who have sufficient savings or a partner with a second income may find that they have enough money to cope until their personal circumstances change for the better. Always check the specifics of each mortgage payment protection policy as they vary considerably between providers.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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