The biggest benefit to taking out income protection insurance is that your policy would provide you with a replacement income if you suffered incapacity or redundancy and lost your own income. Of course there are also many other benefits to taking out a policy especially if you choose to shop around online with an independent payment protection provider.

You could decide how much of your income you wanted to protect and this amount would be agreed upon by the provider of your choice. This sum of money is then paid back to you each month for the term of the policy which would be between 30 and 90 days. All providers will set a maximum amount of time that the protection pays out and this will usually be for either up to 12 months or 24 months. Once the policy has reached its term it ceases providing you with an income regardless of whether you have found work or have recovered from your incapacity.

When taking out your income protection insurance with a standalone provider you could also choose the level of cover needed. You might not need to take out protection to safeguard against unemployment and incapacity together. You could just need to protect against the possibility that you might suffer from redundancy or your circumstances could dictate that you only need to protect against the chance of incapacity.

The income provided from your policy would be used towards meeting the demands of your essential monthly outgoings. These could be varied and as such you would be able to use the benefit from your policy in any way you wanted. You could spread it out as you saw fit depending on your commitments and the outgoings you had to make each month. Without it lifestyle changes might have to be made and these could be drastic and have an effect on the whole of the family. However even when making the most drastic of lifestyle changes you could still find yourself falling short of money and have to juggle bills around. If you cannot catch up payments you have missed you would have to face the consequences and life could become unbearable. If you were unable to manage to maintain your utility bills you could be without heat and light. Your family could suffer if you cannot maintain the monthly food bill and these are just of the many problems you could be faced with.

At least with income protection insurance as a safety net you would have a substantial amount of your monthly income coming into the home. This would provide you with peace of mind which could aid in your recover or in your search for work.

The lender on the high street will see a huge shortfall in their profits when new rulings come into force regarding the selling of loan protection and other forms of PPI. Currently they make around £4 billion each year in profit from adding cover alongside their products such as loans, credit cards and mortgages. The changes will mean there will be a ban on selling any form of payment protection at the same time as their credit agreements. A 7 day period will have to pass before they can contact the consumer to ask them if they want the protection. They will also have to make the consumer aware that they can choose to go with an independent provider at anytime they wish to take out a policy.

Loan cover is taken out to insure against the chance that you could become unemployed or incapacitated. Currently there is not much competition as the lender fails to tell the consumer they can shop around for a policy. By choosing to search for protection with an independent provider it is possible to get up to 80% savings on the cost of the premiums. You would choose the amount of your monthly payment to protect and if the provider pre-agrees this is the amount you get back. You would have to wait for a period of time once you had been unemployed or incapacitated before making a claim and this depends on the provider as does how long payments last.

Some providers will allow you to claim on your loan protection, if needed, once you have been unemployed or incapacitated for just 30 days. With others it could be up to as long as the 90th day before you could claim on the insurance. Once you have made a claim on the insurance policy you would then receive an income each month you remained unemployed or incapacitated for either 12 or 24 months. This would provide you with the time needed to have searched for work and found a suitable job. It could also provide you with the time needed to have made a recovery and be able to get back to your own job.

Loan protection can be a valuable source of safety net on which to rely upon. You lifestyle could be affected a great deal if you were to fall into debt with your loan repayments that you could not catch up on. At the very least your credit rating would be affected and this can make being approved for credit in the future almost impossible. In the worst case scenario you would be taken to court by the lender and could have a County Court Judgement against you and have bailiffs come to take your possession.

Regardless of the fact that the high street lender will not mention you can search around for insurance with an independent provider, you can. They want you to pay out for expensive protection with them as it brings huge profits each year. This will change soon when new rulings come to light from the Competition Commission, which mean the lender will have to tell consumers they can shop around for the cheapest premiums. There will also be a ban on the lender selling payment protection alongside their credit agreements. Lenders will need to wait seven days and then contact the consumer if they wish. Of course during this time the consumer could take the option of enquiring about mortgage protection with an independent provider.

How you can save on the cost of insurance

You can save as much as 40% on the cost of mortgage protection by shopping around online and comparing premiums for the protection. This is another benefit to taking cover with the independent provider as with the lender protection would be calculated into the borrowing and interest will be paid on both the payment protection insurance and the amount you want to protect. The cost of the premiums will depend on your age, the level of protection taken and the amount you choose to insure. The amount chosen would be pre-agreed by the provider and is the amount of money you would receive each month for the term if you suffer from one of the events insured. This amount is tax free and would provide a substantial sum towards you maintaining your mortgage repayments.

The levels of cover you can choose

You might want to protect against losing your income to both redundancy and incapacity together. If this is the case then you could put in your claim if you fall victim to either of the events. If your circumstances meant that you did not need to protect against both then you would be able to protect your repayments solely against the possibility of losing your income to redundancy. However you could also choose just to safeguard against incapacity if this should suit your needs better.

The benefits of mortgage cover

Thought should be given to protecting the repayments of your mortgage as if you do lose your income you could have a huge struggle on your hands to find the money if you do not have such as mortgage protection to fall back onto. Mortgage arrears can lead to the homeowner losing their home if they fall into just a few months of arrears which they have no hope of being able to catch up on. If you cannot make an agreement with the mortgage lender, or one isn’t offered, you would have to go to court and repossession would be the judge’s decision. If they side with the lender you could be evicted.

Mortgage protection insurance could be your repayment security to safeguard against the chance that you could lose your income and be unable to meet your mortgage repayments. You might suffer from a loss of income due to accident or illness or you might suffer from redundancy, in which case you would have to struggle to find the much needed money. With protection behind you, you would have an income, at least for the term of the policy.

Choose where to take out your protection

You would have the choice of where to take out your protection. The lender will offer cover at the time of you taking on the mortgage. However this would usually be one of the dearest ways for protecting your mortgage repayments. Usually lenders will calculate the cost over the term of the mortgage and then add this into the amount you borrow. This means of course that you will be paying interest on the payment protection along with the amount you choose to borrow. It also means that you pay for your protection up front. If you take the cover on offer with the payment protection provider you will be able to pay monthly premiums for your protection. The cost would depend on your age, the level of cover taken and the amount you protect. This would be the sum of money you get back tax free each month, if you fall victim to one of the events providing it was pre-agreed at the time of you applying for protection.

How long do payments last and when can I claim?

A claim can be made on your mortgage protection insurance between the 30th day and the 90th of you being unemployed or incapacitated. This would depend on the terms offered by the provider and should be checked before taking on the protection. At the same time you would also need to check to find out if the provider would backdate the policy to the first day of you becoming unemployed or incapacitated. Once you had begun to receive payments they would continue for either 12 months or 24 months after which time they would simply cease paying out. This can be enough time for you to have searched around and found work or it can provide you with the time needed for you to have recovered from your incapacity.

I receive sick pay so protection would be a waste of money

While you can choose mortgage protection insurance against accident sickness and redundancy together you can also tailor the protection. If your firm pays out great sick pay then you could choose just to take protection against the possibility that you could be made redundant. However your circumstances could dictate that you only needed to insure against the possibility of losing your income to incapacity and with the independent provider you choose just to protect against this event.

Maintaining the repayments of your mortgage is critical if you want to ensure that you do not fall into mortgage arrears. Mortgage arrears of which you cannot catch up on would leave the lender with no choice but to take proceedings against you to repossess your home. This could mean you being evicted from your home and of course you would have to find alternative accommodation. If you were to suffer from incapacity or lose your income to redundancy you could struggle with the repayments. Mortgage insurance could stop this from happening as the insurance is solely for protection against mortgage arrears due to these events.

Where can I take out a policy?

You do have choices when it comes to taking out mortgage insurance. You can choose to take out the protection with an independent payment protection provider and by doing so you will make savings of up to 40% on the premiums for the policy and you also have more control over the policy. The standalone provider will base their premiums on the level of cover chosen, your age and the amount you choose to protect. The amount you choose would be pre-agreed by the provider when you take on the protection and this is the amount that you would be paid back if you were to have to put in a claim due to one of events you choose to protect against.

When can I claim on the policy and for how long?

There would be a period of deferment; this is the time you would have to be unemployed or incapacitated before making a claim on the insurance. Some providers will pay out their protection once you have been redundant or incapacitated for 30 days and with other providers it could be as long as the 90th day before a claim can be made. Some providers could pay back to the first day of your unemployment and incapacity so this would need checking when applying. Once you have begun to claim on the insurance you would then benefit from payments for either 12 months or 24 and then the cover ceases paying out. However this could give you more than enough time to have found work or for you to have recovered and got back to work.

Choosing the level of cover needed

You could of course choose the level of mortgage insurance you want to take out with the independent provider. Of course you can take out your cover to protect against the possibility that you lose your income to either redundancy or incapacity. In this case you could make a claim on the insurance if you suffered from either of these events. However if your circumstances mean you don’t need to cover both events you could just take out protection against redundancy alone. If it works out better for you then you might just want to protect against the chance of incapacity.

Mortgage protection could save your home from lender repossession if you lost your monthly income after becoming a victim of redundancy or were to fall victim to accident or sickness. In the worst case scenario you could have to take many months off work to make a full recovery and with jobs not being easy to come by it could also take a great deal of time for you to secure another position. During this time you would need to find your mortgage money each month or you risk falling into mortgage arrears which could lead to lender repossession.

How does mortgage payment protection work?

You can choose to take your mortgage cover with a standalone provider and by doing so you would have more control over the insurance than if you take it with the standalone provider. With the standalone provider mortgage protection works by supplying you with a sum of money each month which would go a long way towards ensuring that you would be able to continue maintaining your mortgage repayments. For this you would pay a monthly premium which is based on your age when taking out cover, the level of cover taken and the amount you choose to protect. The amount chosen to protect is pre-agreed by your provider and is the sum of money that you get back if you were to become a victim to one of the insured events. The income is paid tax free for the duration which is set by the provider and would either be 12 monthly payments or 24. There would be a deferment period and this again differs between providers with some offering to payout from the 30th day and with others it could be 90 days.

Should you consider it easier to have the protection added in with the mortgage then you will not have the same control over your protection as you would if you choose to take cover independently. The lender will not offer you the chance of paying premiums and they will not take age into account. Instead they will work out the cost of the insurance then add it in with the amount you borrow. This means that you will pay interest on the protection along with the amount you borrow. As you are paying up front for the protection if you were to pay off your mortgage early you would pay out more than needed.

Do I have to protect against unemployment and incapacity together?

You could choose mortgage protection against the possibility of unemployment and incapacity together if this suited your lifestyle. However you might not need to take out protection for both events depending on your circumstances. If for example you get a good sick pay plan from your employer then you could give some thought to just protecting against the possibility of losing your income to redundancy. However if it suited you better then you could choose to insure just against incapacity.

Mortgage protection insurance can ease financial worries if you lose your job to redundancy or if you should fall sick or suffer an accident. If you became a victim to any of these events your lender would still expect you to take care of your mortgage repayments each month. Some lenders might be more lenient than others and could give you some leeway. However as you would not know how long you would have to take to recover or find work you would not be able to make any agreement with them. Due to this you could be taken to court if you have mortgage arrears of just a few months that you are unable to repay.

How is mortgage insurance taken out?

You do have choices of where to take out mortgage insurance. You could decide to shop around and take the cover independently or you could take the protection that is offered by the lender when you take out the cover. With the payment protection provider you would choose how much of your monthly mortgage repayment you wanted to protect. This amount would need to be pre-agreed with your provider when taking it out and is the amount of money you would get back as a tax free payment if you should become a victim to one of the events you had chosen to insure. The sum of money would be tax free and would be paid back once the period of deferment has passed which can be between the 30th and the 90th days. Some providers could also back date the benefit to the first day that you became redundant or incapacitated. Once the policy holder has begun to receive benefit they would then continue to enjoy a payment each month for either 12 or 24 months. After the term has been reached the cover would simply expire.

If you were to take the mortgage protection insurance offered by the lender when taking out your mortgage you would not be able to pay monthly premiums. Instead the lender will calculate the mortgage cover over the term of the loan and then add it into the amount you borrow. As a result of this you would be paying interest on not only what you borrow but also the payment protection itself. You will also be paying upfront for protection which if you manage to pay off the loan early means you have paid more than needed.

Choice of protection with your policy

With a standalone provider you could choose the level of mortgage protection insurance you need. You could choose to protect against the possibility of losing your income to unemployment and incapacity together. However if you circumstances dictate it then you could just to take out protection for unemployment alone. You might also choose just to take out cover for incapacity alone if this would suit your situation better.

Mortgage insurance and the related payment protection insurance policies can be confusing if not explained properly. If no information is given out regarding the exclusions at the time of taking out the protection then you could take out protection that you cannot make a claim against. If you take your policy with the independent provider as opposed to taking protection offered by the lender then usually you will be supplied with this information before taking out the policy.

How can I take out mortgage payment protection?

First you would have to decide on the amount you want to cover of your mortgage repayment with a standalone provider. This is the sum of money you get back from mortgage insurance if you become a victim to one of the events you had covered and this would be pre-agreed by the provider. You would get your income once you had been unemployed or incapacitated for between 30 and 90 days depending on what terms are offered. The same would apply as to how long the protection would last. With some providers it is 12 months and with others it can be 24 months. Some providers will also back date the benefit to the first day of you losing your income to one of the events chosen to protect.

How much does it cost for mortgage protection?

The cost of mortgage protection will depend on where you choose to take the cover. Taking your policy with a standalone provider leads to the biggest savings but even then the quotes can differ. The quote for the premium would depend on three factors, your age, the level of cover needed and the amount of your monthly mortgage repayment that you wanted to cover.
If you take cover with an independent provider the protection would be calculated for the whole term of the loan and then usually it is added into the amount you choose to borrow. This means that you will pay interest on your protection as well as the amount you borrow. You will also be paying up front for the protection so if you should be lucky enough to be able to pay off your mortgage earlier than the term you will have paid out for protection you do not need. If you are paying premiums with the standalone provider you can simply choose to cancel the premiums at anytime you want if you pay off your mortgage or swop mortgages.

What levels of mortgage payment protection are there?

With the independent payment protection provider you could choose to take mortgage insurance for unemployment and incapacity together. If you were then to suffer from either of these events you would be able to put in a claim on the insurance. However your circumstances might dictate that you do not need to cover against both and so in this case you could choose the level. You could just want to safeguard against the possibility of incapacity. However if you have a generous sick pay plan then you might just want to consider insuring against the possibility of losing your income to redundancy. With the high street lender these options would not be open to you.

Mortgage protection could help you to remain in your home by providing you with an income that would go towards ensuring you did not fall into mortgage arrears. If you were to fall behind on your repayments you would be risking losing your home to the lender if you were unable to reach an agreement to repay what you owe. Even a single missed payment would see the mortgage lender sending you a polite letter reminding you of the missed payment. If a judge should side with the lender in court then you could be given an eviction date and have to move out of your home by this date.

Do I have the choice of where to take out a policy?

Many homeowners do not even realise that they have the option of where to take out mortgage protection, however you do have choice. You can shop around and take your payment protection with what is known as a standalone payment protection provider.

This is a provider who only sells payment protection products which includes mortgage, loan and income payment protection. With the independent provider you would be able to choose the amount of your monthly mortgage repayment that you want protection for. This sum of money would be pre-agreed by the provider and is the sum you would get back as a tax free payment each month, if you fall victim to one of the insured events, for the term offered.

What terms are offered on mortgage cover?

You can make a claim on your mortgage protection once you have been unemployed or incapacitated for between 30 and 90 days. This means you have to check the terms offered by the provider before taking on the policy. You would also need to check to see if the provider offers to back date the protection to the first day that you became unemployed or incapacitated. Following the onset of your payments you would then be given an income each month you remained unable to work or were redundant for either 12 months or 24 months, again depending on the terms offered. After this period of time the cover would cease paying out whether you had found work or made a recovery. However it can provide adequate enough to time for you to have been able to do so.

Do I have to protect against unemployment and incapacity together?

This is another of the many benefits you have should you take your insurance with an independent provider as you can tailor the mortgage protection to your needs. While you can choose to cover both events together you could also just choose to safeguard against the possibility of losing your income to unemployment alone or take cover for incapacity alone. The level of protection taken would go towards setting the premiums as would your age when taking the cover and the amount of your monthly mortgage repayment that you choose to protect. Of course the younger you are when taking on the protection, the more savings you could make.

Mortgage protection insurance could stop repossession by your lender if you were to lose your income due to incapacity or unemployment. If you were to become a victim to one of these events you could have a struggle on your hands to be able to continue servicing your repayments. Should you fall into mortgage arrears you would be expected to catch up by making an agreement with your lender? If not the lender would have no alternative but to start court proceedings to take you to court to repossess. This could mean you would be evicted from your home.

Taking out mortgage insurance

You can choose to shop around for your mortgage protection insurance with a standalone payment protection provider. You will be able to pay a premium for the insurance which would be based on your age, the level of cover and the amount of your mortgage repayment that you choose to protect. The amount you choose to protect is pre-agreed with by the provider and is the sum of money that you would get back if you were to become a victim to one of events you have chosen to protect.

When could a claim be made and how long does cover payout?

The policy holder would need to wait for a deferment period to pass and this is the amount of time that would need to be unemployed or incapacitated before being able to make a claim on your cover. Usually this is between the 30th and up to as long as the 90th day. Some providers will also offer to date back the protection to the first day of your redundancy or from you being incapacitated. Following your claim the provider will continue to present you with an income each month for between 12 months and 24. This can provide the policyholder with adequate time to have made a recovery and got back to work or for them to have searched for and found work. However when the protection reaches it term it would cease regardless of your current circumstances.

Your choices for protecting your mortgage repayments

You do have choices for taking out mortgage payment protection. You could of course take full protection which would be for accident sickness and unemployment together. However you might just want to protect against the possibility of suffering from illness or accident. You could also decide that you only need to take out unemployment insurance in case you should suffer from redundancy.

Mortgage protection insurance can be a better form of protection than risking using savings you might have. You would not know how long you would be unemployed or incapacitated as it could take many months to find work or to make a recovery and get back to work. This could mean your savings might deplete well before and this could leave you with the problem of where to get the money needed. If you were risking applying for benefit from the State then you could also be let down as often any income you are entitled to receive often falls short of the income you used to rely on.