Six reasons to consider this insurance
A Guide to Mortgage Insurance
Mortgage insurance, also known as mortgage payment protection insurance, offers monthly payments between 12 to 24 months to people who have become unable to work due to illness, accident or involuntary redundancy. Benefits eligibility begins 30 to 90 days after the first day of the claim, depending on the individual policy terms and conditions. Look out for insurers who will backdate your claim to the first day.
For many homeowners, Mortgage Insurance is a security blanket that helps them keep up with monthly mortgage payments during unexpected unemployment. If you've got into your dream home after years of hard work and saving, no doubt you'll want to keep it safe from harm and that is why taking mortgage cover can give you the peace of mind that should you lose your income, you will not lose your home. . However, just that situation can happen to you, unknowingly, if you don't protect your mortgage payments with mortgage insurance cover.
Mortgage Insurance is designed to cover up to a set amount of the monthly mortgage obligation of the insured following one of the covered events. Benefit coverage is available up to a maximum percentage of standard monthly income, or 1,500 pounds, whichever is lower. The insurance payment cover is often sold in combination with a mortgage by many banks and High Street lenders at the time of taking out the borrowing.
When choosing mortgage insurance cover, do be aware of clauses regarding eligibility. Some exclusions are universal to all protection insurance policies and can include being of retirement age, suffering a pre-existing medical condition, or if you are only in part time employment. Mortgage insurance providers can add in others so checking the wording of the terms and conditions is essential before you sign on the dotted line.
If your employment is seasonal or casual, there is a very good chance that you will not be able to claim on your mortgage payment protection insurance policy.
Do also note that the traditional mortgage lenders will typically only provide a quote for you for the amount of insurance needed to meet your monthly mortgage repayments. You need to remember to include cover for the cost of any life assurance policy, the cost of any investment plan you have allocated to repay the capital amount of your mortgage (if you have an interest only mortgage) and your buildings and contents insurance.
Mortgage Insurance – Quote and Apply
Or maybe you do not think you need mortgage insurance? You might think that it's another additional expense you can ill afford or believe that you have enough saved to cover your mortgage repayments for a couple of months if you somehow lose your job or otherwise are unable to work. However, savings can soon be eaten up in mortgage repayments and the State will rarely assist. Certainly, relying on the State can be a letdown.
Even if you were eligible to claim benefits, currently, if you took out your mortgage after October 1995 you would have to wait nine months before you could make a claim. And even then you would only receive help with the interest part of the mortgage up to £100,000.
There are actually three common types of payment protection insurance products. Along with mortgage insurance cover, loan payment protection and income payment protection are used to protect short-term unemployment stints. The covered events for each are similar, as are the benefits terms.
Payment protection insurance has long been an unknown or misunderstood entity in the insurance environment. For a long time, large banks and High Street lenders have controlled the payment cover environment. Many lenders have packaged mortgage payment and loan payment insurance products with consumer loans as it makes them an astonishing £5.5bn in profits.
Unfortunately, mis-selling techniques used by some of these institutions led to a negative perception of payment cover sellers.
Mortgage Insurance – Apply Online
Following the Citizen's Advice, lodging a super complaint with the Office of Fair Trading (OFT) in 2005 regarding some of the mis-selling practices common to the industry, the industry became tainted. Among the allegations brought before the Office was high pressure tactics used by some lenders to push mortgage insurance on unwitting borrowers. Some lenders even go as far as to build premium costs into the loan repayment costs as a way to hide their expensive premiums. Borrowers often look at the total repayment amount and monthly payment breakdown, without looking into the itemised layout of the expenses.
Along with these deceptive selling techniques, some sellers have been selling mortgage insurance plans to retired people, part time employees, and people with pre-existing conditions, all of whom are ineligible to collect benefit payouts. The plans require that the insured person be employed full time in order to collect benefits.
As a result of investigations by the OFT and the Financial Services Authority (FSA), consumers have become more aware of the benefits of payment protection and the need for caution when working with banks and High Street lenders. The FSA imposed severe fines and sanctions to penalise those it believe used mis-selling techniques.
Consumers now realise they need to be careful when working with lenders. Independent specialists have a better reputation for credible insurance selling and to get the best quality cover for your circumstances getting quotes and buying with a specialist provider is imperative.
A specialist mortgage insurance provider is able to back up the protection insurance products they sell with knowledge about them. And as they specialise in them, the staff selling the products are well trained. This helps greatly to ensure that the individual buys a policy that is suitable for their needs.
While premiums offered by banks and High Street lenders can be expensive, a great benefit of standalone mortgage insurance products is typically a 40 to 80 per cent discount on most rates. With this opportunity to acquire protection at a much more reasonable rate, the value proposition of mortgage insurance, payment cover, and loan protection is hard to ignore. Mortgage cover can provide a financial lifeline and in a world where nothing can be classed as certain, this is essential.
