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UK Insurance Directory-Payment Insurance Magazine-Mortgage Protection Directory  - Article Details

Mortgage protection insurance

Date Added: August 12, 2011 11:21:21 AM
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Mortgage protection insurance






Mortgage protection insurance covers such eventualities such as:
•    If you are involved in a bodily accident and cannot work.
•    If you are made redundant due to no fault of your own.
•    If you are sick and cannot work.

Under this policy the cover provided for includes:
•    Cover for other insurance premiums and household expenses (if applicable).
•    Cover for your mortgage payments for a standard policy.

When you take up a mortgage, the insurance provider will insist that you take up a mortgage protection policy with them but you are free to choose your own policy from the competitively priced policies available online. Some mortgage companies will only protect the monthly instalments but not for the maximum household expenditure you will be facing. Don’t be deceived that the lowest premium provides the best cover you need.

There is normally a health or wealth warning with all your loans and especially mortgages. Mortgage premiums need to be paid otherwise the mortgage loan provider could repossess your property always have a Plan “B”, if you may suffer redundancy, sickness or an accident. If you have a large equity in your house or home, you could sell it yourself and rent, otherwise it could be repossed and you will loose your money. On the other hand, if the asset value of your home is low, it may be best to surrender your house to the mortgage loan provider as the mortgage payments will be excessive. With a mortgage protection insurance policy you will normally have one year to decide which way to go but you must decide quickly.

When providing information to an insurance company make sure that it is honest and there are no inaccuracies. Check your insurance documents when they arrive and if there are any inaccuracies, phone the insurance company and have it corrected immediately and normally within 14 to 30 days of your policy being received by you.

The value of your premiums will most likely depend upon your health, hobbies, age, occupation, whether you are a male or female or a smoker.

To obtain mortgage protection insurance you will need to be:
•    At least employed full time for a minimum of 6 months.
•    If you have any pre-existing medical conditions, these will not be covered.
•    Minimum of 18 years.
•    The company you work with will not make you redundant in the near term.

In the end fill the application form accurately and with due honesty as any false information will invalidate your protection policy.
You will need to check your own affordability criteria:
•    Check whether the mortgage insurance premiums are covered by your initial premiums, if the mortgage premiums go up ensure that the mortgage protection covers this higher cost.
•    Most insurance policies are either 12 months or 24 months maximum and this insurance policy does not last for the mortgage period.
•    Should the policy pay at zero month, 1 month and 3 months. The higher this period the lower will be the mortgage insurance premiums.
•    The minimum premium will depend upon the outstanding loan amount
•    Once you receive your insurance documents read carefully the part where it says what the claims procedure is. You may need to provide proof of:
o    Redundancy from you Employer
o    Be registered as unemployed with a government department.

Store all your insurance documents in a safe place and if your circumstances change (if for instance you get married or have a new joint mortgage) always check with your insurance provider.

Mortgage protection life insurance may be another consideration, as it relates to life insurance, upon your death the mortgage in its entirety will be repaid. Proof of death from your doctor or the hospital will be required.

You can change your mortgage protection insurance, if you see a better offer but always inform the mortgage company when this happens.

 
Why Mortgage Payment Protection Insurance?: Principles and Evidence by Carol Whitehead (Paperback - 31 Dec 1999)




Financial intermediaries and Mortgage Payment Protection Insurance (Findings) by Joseph Rowntree Foundation (Unknown Binding - 2000)

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