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Mortgage Protection Insurance

If you are a new or existing homeowner and are considering ensuring your peace of mind by taking out a mortgage payment protection policy, read on. Here, we review the features and advantages of this type of insurance cover, which protects individuals, couples and families. We also explore the reasons why residential property owners should carefully consider safeguarding the roof over their heads with a policy of this kind.

Mortgage protection insurance guarantees monthly mortgage payments on the family home for employees who are off work due to accident or illness. In the daily rush of today’s busy routine, it may be easy to overlook this wise precaution. Protecting mortgage payments via a suitable insurance policy may just appear to be more paperwork, but in reality, it forms part of sensible financial planning.

Although illnesses, accidents and injuries may seem unlikely, statistics show that such unforeseen and unfortunate surprises can and do occur all too regularly – often at only a moment’s notice. Every day, homeowners across the country find themselves in these unexpected situations. As a homeowner, mortgage payment cover prevents inconvenience and unpleasant difficulties with monthly payments if you are unable to work. Even one year’s worth of savings may not be sufficient when one considers medical expenses, rehabilitation costs, possible private treatment and care bills.

Mortgage payment cover pays the monthly mortgage instalments directly to the bank, building society or other financial institution, thereby removing unnecessary worry from the situation. In addition to mortgage protection insurance, some property owners and breadwinners also decide to insure themselves against critical illnesses. These additional policies provide a lump sum in the event of being diagnosed with specific diseases. Notably, the conditions covered by mortgage protection insurance may be more extensive than under critical illness insurance.

Some life insurance policies or income protection insurance also cover mortgage payments. In essence, mortgage payment protection insurance covers monthly loan payments, whereas critical illness cover pays out a lump sum for a list of diagnoses.

Employees who are off work or on sick pay are entitled to limited sickness absence and pay, whereas the self-employed and independent contractors (such as consultants or specialists) do not usually have the advantage of this extra financial buffer. However, even employees who could receive sick pay from employers would do well to check the level of sickness payments and for how long these would continue in the event of injury or illness.

DSS or Social Security benefits are also available to those who are injured or unable to work. Unfortunately, however, they may not cover the monthly mortgage repayments in full – or even reasonable personal needs. It could well be worth topping up such allowances with private insurance too.

Mortgage protection policies are usually available to permanent employees between 18 and 65 years of age, though specialist and niche insurers also offer plans for the self-employed and contractors. As these latter groups are not usually entitled to employer sickness benefits in the same way that permanent employees are, it is all the more advisable for them to obtain adequate insurance.

The price of mortgage insurance premium cover varies; premiums can be as low as only £10 per month. Policies may pay out for between 12 months and two years. Sometimes, there is a thirty to ninety day waiting period for claims to be paid, depending on the policy.

Finally, certain illnesses are excluded such as pregnancy and childbirth, pre-existing conditions, stress, chronic diseases and unsubstantiated back problems as well as mental health. It is vital to supply the insurer with accurate information to prevent future difficulty.

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