If you consider yourself to be prudent with your finances, then you probably thought of having income mortgage protection as part of your financial planning package.
But why is it important to protect your mortgage payment? Well, the fact is many Britons live from pay cheque to pay cheque without any savings to fall back on. What if you were to lose your salaried income, how will you keep up your mortgage payments and keep a roof over your head?
Income mortgage protection will pay you a tax free monthly income for up to 12-24 months if you were made redundant or were unable to work due to an accident or illness.
Features and Benefits
Depending on the provider, you may be able to choose the length of the benefit period. For example you may choose for a maximum payout term of three, six or 12 months if this suits your circumstances.
You will not be able to replace your entire salaried income. There are maximum benefit levels that you will need to choose from. Before making your decision, just do the numbers and make sure you’ll be able to survive on the benefit level you choose.
If you prefer, you can choose to be covered for only one or a combination of the three involuntary incidences and this will be reflected in your premiums.
Income mortgage protection policies are not usually medically underwritten and most lenders do not exclude things like high risk jobs or dangerous sports.
Choosing Your Policy
There are many providers on the market and sadly some are just interested in turning over high premium policies. They do not take the time to explain the exclusions to their customers and pretty often the customer ends up with a policy they cannot claim on.
The Financial Services Authority has taken note of these incidents and together with the Office of Fair Trading, handed down fines to the naughty companies.
Before you purchase your policy, be sure to read the terms and conditions carefully. This way you will know exactly where you stand in terms of making a claim.
To obtain a more reasonable premium, avoid the high street lenders and obtain your quote from ethical independent companies such as British Insurance. You will be amazed to know that you can save up to 40% off your premiums.
Income mortgage protection is a security blanket of sorts; it can protect you from the threat of repossession, developing a bad credit profile, recurring red letters, persistent creditors and many other unpleasant situations that can accompany job loss.
For many years I have been a staunch campaigner against the major names in finance who, I believe, rip-off their customers by selling over priced, often unsuitable payment protection insurance (PPI) cover.