Anyone who has a mortgage to repay over many years would be devastated at the sudden loss of their income. Mortgage repayments would have to be kept up with regardless of the fact you are unemployed or incapacitated. If you cannot then you are risking mortgage arrears, which could possibly lead to you losing your home. While you cannot predict what the future holds you can at least protect against it by taking out mortgage payment protection insurance.

What a policy does

Mortgage payment protection insurance (MPPI) would be there for you to fall back on if you were to lose your income to unemployment or incapacity. The tax free monthly sum the policy supplies would go towards you being able to keep up with your monthly mortgage repayments, and associated costs such as home and life insurance, which could stave off repossession.

You would pay a premium each month which would take into account the amount of your mortgage repayment you protected, how old you are when applying and the events you chose to protect against. Should you then become a victim to one of these events you would be able to make an insurance claim.
You need to check the terms of any policy you were taking out as these can differ greatly with different providers.

How much benefit would the policy pay out?

You could choose the amount of your mortgage repayment you wanted to protect. However all providers will state a limit as to how much you can protect so the sum you choose would need to be pre-agreed by the provider at the time of you applying for the cover.

Your pre-agreed amount would then be paid back to you for the term of the cover once you have waited for the deferment period to pass, which again would depend on the provider you had chosen to take out your mortgage payment protection insurance with.

When would I be able to make a claim against the policy?

You need to check with the provider you were taking out your policy with to find out when a claim could be made on the insurance. There are some providers that would begin to payout an income once you had been unemployed or incapacitated for a period of 30 days. However others could ask that you wait for a period of as long as 90 days before a claim can be made.

When considering how long you would need to wait before making a claim you need to take into account that just a couple of months of mortgage arrears can be enough for the lender to take you to court to seek to repossess your home. 90 days could be too late to begin claiming as you would already be in mortgage arrears by 3 months at this time with the lender threatening to repossess.

How long would my policy pay an income?

Just as the length of time before claiming can differ then so can how long the policy lasts so checking this before taking out the policy is essential.

Some providers could offer you 12 monthly payments once the cover has begun to pay out while other providers could extend this to 24 months. Of course if you were taking out protection that lasted 24 months the premiums would be higher than cover lasting 12 months.

12 months can be more than enough time for you to have recovered from your incapacity or to have searched around and found work.

Checking for eligibility

All insurance policies come with certain terms and conditions which have to be met in order for those taking out a policy to be sure of being eligible to claim. Mortgage payment protection insurance also comes with terms which have to be checked before taking on the protection.

Ethical payment protection specialists will always provide you with the information you need so that you can be sure you would be able to make a claim on the policy.

The terms can differ greatly with different providers so it is essential that you do read the small print of any policy you are considering before taking it out. For instance you must be living in the UK, Isle of Man or the Chanel Isles and have been working in a full time position for at least 6 months prior to your application.

Exclusions that could exist in mortgage payment protection insurance

As mentioned above some providers can add in more exclusions than others in their policy so do check before taking out the policy. However all will add in at least the most common of exclusions.

If you are self-employed you would need to check the wording of the policy very carefully. Generally you would only be able to make a claim on the policy if you were to have to cease trading on a permanent basis.

If you have been diagnosed with a pre-existing medical condition prior to applying for mortgage protection you also have to check the wording of the policy very carefully as there would be certain limitations.
You would not be eligible to make a claim on the policy for illnesses such as back problems and stress. So again these would have to be checked over carefully.

Choose what you want to protect against

Of course you could choose to take out mortgage payment protection insurance against the possibility of suffering incapacity or unemployment together. You would then be eligible to make a claim on the insurance should you suffer from either event.

However if you get a good sick pay plan from your employer then you might just want to take out protection against redundancy alone.

You could also choose just to protect against the possibility of suffering accident or illness if this should suit your lifestyle better.

The level of protection you choose to take for your mortgage repayments will reflect on how much the monthly premiums would be. This means that you will only be paying out for protection that is needed.

Other payment protection products

Mortgage payment protection insurance is just one form of cover that could be taken as insurance against redundancy and incapacity. There are two others forms which you might want to consider and these are loan payment protection and income payment protection.

Income payment protection would provide you with an income that could be used towards any financial outlays that you have. You would be able to use the income as you wanted just as you did with your own income. You could use some of it for maintaining your rent, your utility bills and to ensure you had the money for the food bill each month.
Loan payment protection would provide you with an income, the amount pre-agreed by the provider, which would go towards your loan repayments each month. This could stop you from falling behind on your repayments and having to face the consequences. If you fall behind on unsecured loan debts that you cannot catch up on then you are
risking losing your home. Missed payments on unsecured loans could mean you lose your possessions to bailiffs.

Why consider taking mortgage payment protection

Maintaining your mortgage repayments is imperative if you do not want to risk losing your home. Some individuals take the risk of being able to rely on savings if they should become unemployed or incapacitated. Others believe the State would provide them with an income so mortgage repayments could be maintained.

You need to prove that you were eligible to claim an income from the State and even if you were the only help you would get for your mortgage repayments is towards the interest part of the mortgage repayment.

State benefits would not pay out for 13 weeks and by this time you would already be in arrears with your mortgage repayments and the lender could already be threatening repossession.

How you can get a great deal on your mortgage payment protection

When taking out the mortgage with the lender they will try to get you to take out mortgage payment protection insurance from them. However by doing so you could pay way over the odds as lenders will usually work out the cost of the protection and then add it into the amount you are borrowing. This means you pay interest on your protection.
Taking cover with the independent provider you can pay premiums for the cover and search around and compare for the best deal on your mortgage payment protection. With some providers you could perhaps save up to as much as 40% on the cost of the premiums.
You could also compare the terms offered by the provider to ensure that you get the right terms on your protection.

The many benefits of mortgage cover

Without mortgage payment protection to rely on your unemployment or incapacity could be a lot more stressful than it need be if you had cover to rely on. With protection behind you that has been carefully chosen you would know when you could claim, how much you had coming into the home towards your mortgage repayments and how long the benefit would last.

If you should become unemployed or incapacitated you would not have the worry of falling behind on the repayments of your mortgage. Mortgage payment protection insurance would allow you time to get out there and find suitable work or allows you the time to make a full recovery and be able to get back to earning your own living again.

Just about any article you read relating to insurance is by definition going to be a little gloomy. By its very nature, insurance has connotations of problems, catastrophes, disasters and bad luck. Mortgage payment protection insurance is no different in that respect, yet thinking about it may be a good idea – unless you enjoy the thought of gambling with your home.

The trouble is that however depressing you may find the subject of insurance, the reality of life is that bad things happen – and one of the more common personal disasters is the loss of income through things such as redundancy, accidents and sickness. Should you encounter such a problem you can of course try and cope without insurance. If you’re very lucky you may even succeed – for a while.

In this article we don’t want to paint a doom-and-gloom scare story nor are we trying to convince anybody that mortgage payment protection insurance is something you must have ‘NOW’! Rather, we’re looking at the risks, their effects and the options you have to protect yourself at least in part.

The risks

There is always a tendency to think, “it can’t happen to me”. Sadly, it can and does.

If you think this is an exaggeration for effect, between December 2007 and March 2009 the number of people claiming on insurance due to losing their income increased by 200% (source – Association of British Insurers)

You can lose your job and income in an instant for any one of many reasons. Many people just never even see it coming.

The broken leg incurred during that a gentle weekend cycle means that climbing scaffolding is out of the question and there goes your job. Your doctor has just advised an extended period free from work so you can fully recover from an illness. The head of your multinational sitting in an office on the other side of the planet has just decided to rationalise things globally and as a result your job no longer exists.

All of these can result in an immediate loss of income. Yes, you may get a payoff, perhaps even a generous deal, but how long will that money last if you have no other regular money coming in? Can you be sure that you will be able to secure rapid replacement income in the event such calamities strike?

If you are unwell or injured, then even if you live in an area where your skills are in high-demand, you may not be able to work however much you wish to. If you have lost your income for reasons of redundancy, it would be extremely optimistic to believe that you’ll rapidly find another job and the income that goes with it.

The point is, most of us are at risk of losing our income and potentially for extended periods of time. If you do think it could never happen to you, you may wish to re-consider.

The consequences – general

There are many people who offer ‘life-coaching’ advice and one of their key beliefs is that almost every problem in life can be seen as, or turned into, an opportunity.

If you have lost your income, it may well be the ideal opportunity for you to re-train, change career, move home or just spend more time with your family.

Although all these things are undoubtedly valid in many cases, there is an underlying problem. The trouble is that much of the world around you is driven by income - in other words money.

It may be that you feel very positive about the opportunities offered by your loss of income but you may find that the person at the supermarket checkout is rather less interested and expects you to pay for those groceries with some form of money. You may have just finally found time to finish that model that has been sitting on the shelf for years but it is unlikely that your local electricity company will accept it as payment of your quarterly bill. It is unlikely that you’ll be able to keep your car by offering the car finance company your home grown vegetables instead of their monthly payment when it’s due.

Yes, these are slightly surreal examples but the point is clear. However positive you are about your loss of income, you will need to do something rather more concrete to find replacement income otherwise you could quite literally find your house and possessions disappearing around you.

The reason that could happen is that many of your possessions may have been purchased with one form of loan or another. Perhaps it is some of your furniture that is on a Hire Purchase loan. It could be your conservatory purchased with a bank or credit card loan. Few people are fortunate enough to be able to purchase their car outright and you may have car finance in place. Even fewer people are able to purchase their house and home and as a result have a mortgage.

In all these cases, however sympathetic the lenders may be to your individual circumstances, in the final analysis you will need to keep up repayments of the loan. If you can’t, sooner or later they will commence legal recovery and repossession activities.

The consequences – mortgage specific

Mortgage lenders do not like repossessing houses. It creates a lot of paperwork for them and generates bad publicity and sometimes ill-feeling in the pubic and local communities. If the market is depressed they may be unable to sell the repossessed property for sensible price and may end up carrying a loss – which they will then continue to try and recover from you.

It is therefore not an option they want to progress but if you are in arrears and showing no sign of being able to keep up an agreement repayment schedule then you should be clear – they will move to repossession.

You could quite easily end up losing the roof above your head.

Mortgages & Myths

Apart from the “it couldn’t happen to me” tendency, there are certain myths around that can be attractive if we’re looking for reassurance about the uncertain world around us:

• “Mortgage companies only repossess as a last resort”. This is GENERALLY true, but not always. Even if your mortgage lender is sympathetic, their patience is not inexhaustible and if you are unable to meet an agreed repayment schedule then they will repossess your house – and perhaps rather sooner than you may believe.

• “The mortgage company would agree a ‘payment holiday’ if I was unemployed”. This is possibly true but equally possibly untrue. Your mortgage lender MAY agree to take reduced monthly mortgage repayments that consist of the interest only. It is unlikely that they would allow this to continue for very lengthy periods of time.

Some in very special circumstances MAY agree to a complete payment holiday but this will be rare and only likely to be for very short durations.

• “The courts are cracking down on repossessions”. This article cannot provide legal advice but it may be exceptionally risky to believe this to be ‘the norm’. In general, the courts and legal processes administer the law and they do not make judgements based upon the merits or ‘likeability’ of a given individual or how much the newspapers are complaining about the rising number of repossessions.

As a general rule the mortgage lender has a legal right to repossess a property if you’re unable to keep up with your repayments and a court may be unlikely to stop that other than in exceptional circumstances (assuming all due legal processes have been followed by the lender).

• “The government will help me keep the roof over my head if I couldn’t pay”. This one is only partly true and it is such an important point that it’s discussed in some detail in the following section.

Mortgage troubles – Government help

During 2008 and 2009 the government announced revised help schemes for those in trouble with their mortgages. This article cannot go into every detail here but in terms of key points, you may wish to keep the following in mind:

• The government’s help is limited to contributing a percentage of the interest on your monthly repayment. It will not pay any capital off at all.
• For this to help you keep your home, you will need to have obtained your lender’s agreement to accept interest-only payments. They may or may not agree and even if they do agree, they are unlikely to continue this scheme for very lengthy periods.
• The government’s help is partly means-tested. You will not be eligible if you have savings above a fairly modest level. You will need to use those before you can ask for help.
• If you are receiving this help, you will still need to find the remainder of the monthly interest payment yourself. If you have no income, even this reduced amount may be beyond you.

All in all, if your only strategy should disaster strike is to rely solely upon the government’s help, you could be taking a very big risk indeed with your house.

Mortgage troubles – the role of insurance

For many years the insurance industry has offered policies to help in these circumstances. There is a family of such products that are generally referred to as ‘PPI’ for Payment Protection Insurance. Just to make things even more complicated, these policies are also sometimes referred to as ASU for Accident Sickness and Unemployment insurance.

There are several individual policy types that come under the heading of ‘PPI’. They protect against various risks and offer various degrees of potential benefits.

Some are aimed specifically at providing a general monthly income to you if you have lost yours for involuntary reasons. This can then be spent as you think fit. These forms of policies are often referred to as Income Protection Insurance though they are not intended to provide lifelong cover against risks such as permanent disability etc.

There are also insurance policies that are aimed specifically at payment protection. They can be linked to one or more payments and if you lose your income they can continue to pay your car or credit card repayments etc.

There is then a type of policy that is linked directly to your mortgage and this is called Mortgage Payment Protection Insurance and is sometimes abbreviated to MPPI.

The basic operational principles of mortgage payment protection insurance are very straightforward. If you lose your income for reasons covered by your policy, the insurance will pay your mortgage for a specified period of time. This will allow you to concentrate on finding new income entirely free of the threat of losing your home. It also means that you won’t have to spend huge amounts of your time negotiating and arguing with the mortgage lenders and government trying to put together a short-term deal to protect your home.

Mortgage insurance – the facts

The details of each policy will inevitably be slightly different, as indeed will each policyholder’s needs. This article is NO substitute for reading carefully the details of any policy under consideration BEFORE you purchase it. Even so, we can perhaps help with a general description of some of the general characteristics you will probably find in many of the policies:

• These policies usually cover the risks associated with an involuntary loss of income due to compulsory redundancy, sickness or accident. You can cover only redundancy, only accident and sickness or any combinations thereof.
• Most policies of this type will pay out up to 1500 pounds per month or 50% of your old gross income (whichever is the smaller)
• This can continue until you
o Obtain new employment income
o Recover your health and recommence employment
o Exceed a maximum period of usually 12 months though there are some policies that can offer 24 months cover.

The payments can be made directly to the lender meaning you do not need to be involved at all.

It’s worth remembering though that mortgage payment protection insurance exists to protect you from the unforeseen or from other people’s decisions. It cannot cover you against the consequence of your own decisions. You therefore will not be able to claim under the following illustrative circumstances:

• Voluntary redundancy, career breaks or returns to education etc
• Resignations or dismissals.

If you have opted for accident and sickness cover, also excluded as reasons for claiming will be:

• Normal pregnancies
• Some forms of elective medical treatment such as cosmetic surgery.

Many policies will insist that the policyholder has held the policy for a minimum period of time (usually 6-12 months) before a claim can be made. They may only start paying out 30-90 days after the claim is lodged though some may backdate payments to the initial start date of the loss of income.

Insurance conditions

As this insurance can pay out significant sums of money, the insurance companies are understandably keen to avoid fraudulent claims and very-high risk applicants. If you are categorised as ‘high-risk’ you may have trouble obtaining cover or have to pay more for it.

To avoid being seen as ‘high-risk’ you may have to show (assuming also you have opted for sickness and accident cover):

• You are in permanent verifiable employment. This does not have to be full-time but it would exclude several forms of self-employment.
• You have a reasonably clear work history and do not work outside of the UK.
• You do not engage in highly dangerous sports and do not work in a very hazardous occupation.
• You have held your current job for a minimum period (usually 6 months).
• You are not suffering from an existing serious medical condition.

If you are unfortunate enough to need to make a claim, you can expect to be asked for evidence as to the cause of your loss of income. Acceptable examples are usually an employer’s statutory redundancy notice or a medical certificate etc. Some insurance companies may ask for their own medical report and during the period of the claim you may have to provide periodic evidence that you remain unemployed and actively seeking employment (or evidence that you are medically unfit to do so).

Mortgage protection insurance – some chequered history

It’s possible that you may have heard in the past of some issues relating to this form of insurance. These arose with those policies that were sold by some mortgage lenders.

For some decades, the banks and other mortgage lenders aggressively sold mortgage payment protection insurance during the process of applying for a mortgage. As they had a semi-captive audience, there prices were generally much higher (up to several times more expensive) than those available for the same insurance purchased on the open insurance market. They relied to some extent on people’s natural inclination to apply for the mortgage and any protection insurance in the one activity.

However, this sales effort was often aided by suggestions that the outcome of the mortgage application could be linked to taking this insurance out. Following complaints and investigations by various authorities, there were also cases that came to light of mis-selling where policies were being sold to people who would never in fact have been able to launch a successful claim (such as categories of the self-employed etc).

Several companies received significant fines and some regulatory changes were made. From 2009 mortgage lenders will have to wait until 7 days have passed after loan approval before being able to offer this insurance to their loan applicant clients.

Mortgage protection insurance – the current position

Today this form of insurance continues to be sold by the major lenders. It can be taken out at any time and not just at the time a loan is being applied for.

Although the lenders remain major sellers of mortgage payment protection insurance, their prices also continue to be several times more expensive than for the same insurance purchased elsewhere.

There is in fact a vibrant open insurance market that operates on the Internet. There you will find specialist providers of many forms of payment protection insurance including those policies targeted specifically at mortgages.

If you look at their sites and compare their prices with those of the loan companies and other lenders, you will probably find that the specialists are usually many times cheaper and their cover is often superior also.

Mortgage protection insurance – is it a good idea?

No article should presume to advise you on what’s best for you and perhaps your family. Insurance of course costs money and deciding how to balance the costs involved versus the risk reduction and peace of mind is never an easy thing to do. Ultimately only you can decide.

What this article has looked to achieve though is to indicate that the possibilities of income loss are real and with most of us as a matter of permanency in today’s world. It is unlikely that this will change in the foreseeable future.

Given this background reality, it may be a mistake to think that you’re immune or that if it does happen, you will manage to keep your home by a mixture of good luck, government help and personal charm.

Mortgage lenders are hard-nosed businesses and they will repossess if necessary.

To avoid this coming to pass, ultimately you have a choice of one of two possible strategies:

• You can hope that in a crisis somehow the government, mortgage lenders and perhaps good fortune will come to your rescue
• You can put your own contingency plan in place through insurance.

It may boil down to how much control over your future you like to have. If you like gambling and in a crisis accept that other people have control over whether or not you keep the roof over your head then the first option above may suffice.

If not and you would rather have more certainty that you were in the driving seat in such as situation, then mortgage payment protection insurance may be for you.

If you a financially astute or in the process of evaluating your financial situation, it is important to consider mortgage payment protection insurance as part of this review.

A mortgage is the largest debt you will have and as this loan is secured by your home it is even more important to ensure that if anything were to happen you your income your ability to pay your mortgage will not be affected.

Losing all or part of your income can be very scary especially if it is sudden. There will be little or no time to plan an exit route if this was a sudden occurrence so it is best to plan ahead. The economy is not performing as we would like and this is evident in the number of redundancies that are being announced each week. What is even scarier is that the announcements are being made by some of the major organisations that we all hoped were stable.

In addition to redundancy another threat to your income could take the form of sickness or accident. While you employer may give you advance notice of the redundancy, who warns you about sickness or accident.

These three incidents are mentioned because they have a big impact on your income and they are also the three events covered by the protection insurance policy.

Taking out this cover will ensure that if you were to lose all or part of you income, you will receive financial help for a specified time. This will allow you to recover or find a new job and still have the ability to keep your home in your hands.

Mortgage payment protection insurance is a protection policy that will pay you a monthly tax free benefit if you were faced with involuntary unforeseen unemployment or if you got ill or had an accident that prevented you from working for a while.

The policy provides you with temporary relief and is not intended to last for an extended period of time. The monthly benefit will continue for a maximum 12 or 24 months subject to the terms and conditions of the provider you choose.

Some policies are offered by and attached to your mortgage provider while others are independent. The independent policies usually pay you directly and you can distribute the funds amongst your bills accordingly. With attached policies, the provider will normally pay their debt first and pass on any excess to you.

What does the policy offer?

As stated the policy pays a monetary benefit if you suffer from the any of the qualifying events. But beside the cash payment which is certainly needed, from the moment you sign up for a policy you will have peace of mind.

Once you meet the eligibility rules which we will explore later, you can rest assured that if you ever need the funds available from the policy it will be there. There should be little to no hassle when it comes to making a claim.

The funds will then be used to keep up the payments on your mortgage thus protecting you from all the negative effects of losing all or part of your income.

The other important aspect of the policy is the peace of mind it provides. With protection in place you don’t have to worry about anything. If you are ill or recovering from an accident, you don’t want to be stressing about meeting your mortgage payment. The policy will pay that for you so all you have to do is rest and recover.

If you are the main income earner in the family, you would not have to put any pressure on you loved ones either. The payments will be covered and because of this, not red letters or debt collectors would hassle you.

Things to note about your policy

While the mortgage payment protection insurance sounds like the ideal policy there are some points you should consider when taking out cover.

There are several eligibility rules that you must meet before you can be considered fully covered and will list these in a moment.

When taking out a policy you will need to wait around three months before you can make a claim. This is the qualifying period set by the provider.
In addition to the qualifying period, there is a 30 – 90 day deferment period set by the provider. This period indicates how long you will need to wait after you experienced one of the qualifying events before you can submit a claim.

With most providers, the longer the deferment period is the lower your premium will be.

Do you qualify for cover?

To obtain a policy you will need to meet the following criteria. While each provider will have different rules, here are the main points to consider.

You will need to be between 18 and 64 before you can apply for a policy. In addition to this, you must be working for at least 16 hours per week. This employment must be UK based and should not be considered temporary or seasonal as providers do not offer cover in these cases.

The insurance you take out must be for you residential property and you must reside there full time.

As the policy covers redundancy there is a stipulation that if you are aware of impeding job loss, you will not be covered by the provider.

These are just a few of the common eligibility rules and your provider may have different criteria. Whatever they are just be sure to make a note of them and ensure you meet the requirements before taking out cover.

Benefit details

Under this protection policy the provider will not pay the equivalent of your entire salary as a benefit. This is due to the maximum payment levels they have in place.

Generally a provider will pay £1,500 or half your salary as a benefit, whichever is less. When you are choosing your policy, bear this in mind and make sure the amount you choose is enough to cover your mortgage payments.

The amount paid by the provider may seem unfair but this is done in order to encourage claimants to go back to work and keep the economic wheels turning.

If after being made redundant you were paid your full salary for a year, would you be in a hurry to go back to work? Not many people would. When only 50% of the salary is paid that is a great motivating factor to get back in the job market.

Other types of protection

You are under no obligation to take out mortgage protection insurance. There are other forms of protection on the market. You need to evaluate them and decide which cover is best for you.

One such alternative is the Support for Mortgage Interest Scheme (SMI). Under this scheme the Government will provide assistance for the first £200,000 of your mortgage.

Where as with protection providers you have an option to choose a 30 day deferment period, the mortgage interest scheme only allows claims after 13 weeks.

The scheme will only cover your mortgage if one person is responsible for the mortgage and that said person becomes unemployed. If two people pay the mortgage but only one is made redundant, not cover is provided. In the latter case, both people need to lose their jobs before payment can be made.

As you can see this plan does not cover accident and unemployment so if you want those elements added, this may not be the best scheme for you.

State Benefits
Another means of obtaining financial relief comes in the form of state benefits. According to the Office of National Statistics (ONS), as at May 2009 there were over 1.5 million people applying for benefits. In the previous month, there were 39,300 less applicants. Over the year the actual number of applicants increased by over 725,000. The trend suggests that more and more people are leaving employed positions and the queue for state help is growing. Whether or not there are sufficient resources to meet this demand is a question that will be answered with time.

If you are seeking protection you need to ask yourself firstly if you will qualify for state help, if you can afford to join the queue and if the amount paid will be enough to sustain you.

Friends and family Support

This may not be an option for many applicants but for some it may be a viable if not risky alternative. The problem with this is how many of us have friends or family who can loan us funds to last 12 or 24 months. They may be struggling to meet their commitments as well so helping out a mate may not be possible.

With that in mind it the best option seems to be taking out your own protection policy. This way you will know exactly how much you will receive when you submit a claim. You will know how long the payment will last and the payment will be certain.

Payment protection insurance (PPI) policies

Mortgage payment protection insurance is part of the payment protection family and there are many variations that provide cover accident, sickness and unemployment.

Even though the policies in the PPI family carry different names the end result is always the same. The policies provide a tax free cash lump sum which acts as a supplementary or replacement income to help you in you time of financial uncertainty.

Policies were created to cover many types of debts, not just mortgages. There are loan and credit card policies known as loan insurance or credit protection policies. The will help meet your loan or credit card payments if you lost all or part of your income due to all or a one of the three covered events.

General accident, sickness and unemployment policies (ASU) may not be tied to any particular debt, these policies can be independent plans and you can use the funds to pay the bills you choose.

One other policy you should know about is the permanent health insurance policy or income protection policy as it is more commonly known. This policy is still designed to provide financial relief but there are two major differences.

Firstly, the policy will not cover involuntary unemployment. The provisions are strictly for accident and illness. The other main difference is the duration of the payment. This income protection policy is known as a long term policy as it can pay out until the insured reaches retirement age.

Policy exclusions

When considering payment protection policies, you must pay attention to any exclusion attached to the policy. This field has had major problems with mis-selling which prompted the Financial Services Authority (FSA) to step in.

Back in 2007 the Office of Fair Trading (OFT) together with the FSA investigated a major complaint regarding mis-selling within the payment protection industry.

Many high street lenders were fined and the industry is monitored very closely.

The main problem occurred because clients were being sold policies they could never ever claim on. Providers were not taking the time to ensure the exclusions were explained well and they were not interviewing potential customers clearly. They had no idea of how their exclusions would affect the customers and this is where the complaints stemmed from.

There were cases where retired people were sold protection policies. What income were they protecting? Policies like the mortgage payment protection insurance clearly states that applicants must be employed for at least 16 hours per week. This was an oversight on the side of the providers but consumers need to take responsibility too.

If you are purchasing a policy, don’t wait for the provider to explain everything to you. It may be difficult to understand some of the terms and jargon but ask for help and makes sure you understand how the policy will affect you before you sign up.

Here are some of the exclusions to look out for:

If you have an existing medical condition that is on the provider’s list, you will not be covered for this. You can view the list of illnesses in the policy documentation.

Conditions such as self inflicted injuries, normal pregnancies, stress and back pains to name a few, are not covered.

If you have a condition that is not on the list, make sure to inform your provider and if they will cover it, get written confirmation for your records.

These few points do not begin to touch the depth of exclusions which differ from provider to provider. Get to know the details of your policy in order to ensure your policy will pay out when you need to make a claim.

Policy flexibility

Another good reason to choose a mortgage protection product, relates to the flexibility offered. With the mortgage support scheme, you pretty much have to take what is offered, but it is not so with the private protection policies.

If you were receiving a substantial sickness pay for longer than the private policy offers, you could approach your provider for sickness and redundancy coverage only. You can apply for cover for one or any two combinations of the three covered events. Depending on what is covered, you could end up paying a lower premium

Carer Cover

There are instances when you are covered under the policy for accident, sickness and unemployment but you do not experience any of these and you still need to give up work to care for a loved one.

If this happened the provider may offer you carer cover. This extra cover comes at no extra coast and the policy will take care of you while you take care of your loved one.

Generally the benefit options are a maximum lump sum payment of up to £50,000 or 12 monthly cash payments.

Age Related Cover

A selected few provides will offer age related cover which charges you a premium based on your age. Even though you may start off the policy paying a high some for example, your premiums will not increase as you age.

How to select a provider

When selecting your mortgage payment protection insurance provider, there are many options available and at first this seems very good. When you begin to evaluate your options though you could discover that too much choice can paralyze you.

How do you know which is best for you? The best way to select a provider is to make a checklist of things you want and evaluate the provider against that list.

One of the main deciding factors could be the price. If you have a premium in mind then obtaining quotes you could rule out have of the providers you are presented with.

High street providers are known for offering products at a higher premium than independent providers. If you are cost sensitive, begin with standalone policies and work back from there.

Mortgage companies will also try to package their products when you purchase your mortgage, but you do not have to take up this offer. If you do you could be missing the opportunity to take up great deals in the open market.

While high street providers may not like the idea, if the Competition Commission’s recommendation is heeded whereby lenders have to wait 7 days after selling a loan or mortgage before selling PPI to go with the borrowingr, this rule could be implemented at the end of 2009.

Some bodies are not in favour of this rule and they counter with the argument that if the credit provider does not sell the protection product to the consumer then the consumer may not take any cover at all and their income will not be protected.

Despite this view, the consumer has the responsibility to seek cover and giving them a choice of providers will empower them to make the best decision.

The next point on your shopping checklist could relate to the benefits offered. You know that providers have maximum benefit levels so when making you decision, calculate how much you will need to maintain your mortgage and use that as a guide for the minimum you will accept.

Some providers will only cover the mortgage payment but a few do cover related mortgage expenses such as building and content insurance.

Once you’ve made your decision, if you are not satisfied or if you have a change of mind you can always cancel the policy within the 14 day cooling off period.

Summary

If you have a mortgage and you choose to ignore the need for mortgage payment protection insurance then you will be putting you and your family at risk. If you lost all or part of your income, this will affect your ability to meet your monthly payments which could lead to missed mortgage payments and various kinds of unpleasant experiences from persistent debt collectors to repossession orders.

In light of this it is essential to protect you home. The mortgage protection policy will provide you with a monthly tax free income to supplement or replace your income if you are ill, suffered an accident or were made redundant.

Depending on the deferment period you choose, you can have your payment in as little as 30 days after the qualifying event. When you consider other government schemes having a deferment period of 13 weeks, then one month is very appropriate.

Once you did you homework regarding exclusions and your eligibility before the policy started, if you needed to make a claim the process will be pain free and straight forward.

One of the best benefits you will receive is peace of mind. When you have cover in place, losing all or part of you income will not be as stressful for you because you know your policy will kick and provide the cash you need. Without coverage you could end up in a very unstable financial position and this could threaten your health as well as your security.

Now that you have read the features and benefits of mortgage payment protection insurance, can you think of a reason to remain unprotected? The cost of premiums can be very low but the benefits you receive could be the difference between financial independence and financial ruin.

Anyone who has a mortgage to repay over many years would be devastated at the sudden loss of their income. Mortgage repayments would have to be kept up with regardless of the fact you are unemployed or incapacitated. If you cannot then you are risking mortgage arrears, which could possibly lead to you losing your home. While you cannot predict what the future holds you can at least protect against it by taking out mortgage payment protection insurance.

What a policy does

Mortgage payment protection insurance (MPPI) would be there for you to fall back on if you were to lose your income to unemployment or incapacity. The tax free monthly sum the policy supplies would go towards you being able to keep up with your monthly mortgage repayments, and associated costs such as home and life insurance, which could stave off repossession.

You would pay a premium each month which would take into account the amount of your mortgage repayment you protected, how old you are when applying and the events you chose to protect against. Should you then become a victim to one of these events you would be able to make an insurance claim.

You need to check the terms of any policy you were taking out as these can differ greatly with different providers.

How much benefit would the policy pay out?

You could choose the amount of your mortgage repayment you wanted to protect. However all providers will state a limit as to how much you can protect so the sum you choose would need to be pre-agreed by the provider at the time of you applying for the cover.

Your pre-agreed amount would then be paid back to you for the term of the cover once you have waited for the deferment period to pass, which again would depend on the provider you had chosen to take out your mortgage payment protection insurance with.

When would I be able to make a claim against the policy?

You need to check with the provider you were taking out your policy with to find out when a claim could be made on the insurance. There are some providers that would begin to payout an income once you had been unemployed or incapacitated for a period of 30 days. However others could ask that you wait for a period of as long as 90 days before a claim can be made.

When considering how long you would need to wait before making a claim you need to take into account that just a couple of months of mortgage arrears can be enough for the lender to take you to court to seek to repossess your home. 90 days could be too late to begin claiming as you would already be in mortgage arrears by 3 months at this time with the lender threatening to repossess.

How long would my policy pay an income?

Just as the length of time before claiming can differ then so can how long the policy lasts so checking this before taking out the policy is essential.

Some providers could offer you 12 monthly payments once the cover has begun to pay out while other providers could extend this to 24 months. Of course if you were taking out protection that lasted 24 months the premiums would be higher than cover lasting 12 months.

12 months can be more than enough time for you to have recovered from your incapacity or to have searched around and found work.

Checking for eligibility

All insurance policies come with certain terms and conditions which have to be met in order for those taking out a policy to be sure of being eligible to claim. Mortgage payment protection insurance also comes with terms which have to be checked before taking on the protection.

Ethical payment protection specialists will always provide you with the information you need so that you can be sure you would be able to make a claim on the policy.

The terms can differ greatly with different providers so it is essential that you do read the small print of any policy you are considering before taking it out. For instance you must be living in the UK, Isle of Man or the Chanel Isles and have been working in a full time position for at least 6 months prior to your application.

Exclusions that could exist in mortgage payment protection insurance

As mentioned above some providers can add in more exclusions than others in their policy so do check before taking out the policy. However all will add in at least the most common of exclusions.

If you are self-employed you would need to check the wording of the policy very carefully. Generally you would only be able to make a claim on the policy if you were to have to cease trading on a permanent basis.

If you have been diagnosed with a pre-existing medical condition prior to applying for mortgage protection you also have to check the wording of the policy very carefully as there would be certain limitations.

You would not be eligible to make a claim on the policy for illnesses such as back problems and stress. So again these would have to be checked over carefully.

Choose what you want to protect against

Of course you could choose to take out mortgage payment protection insurance against the possibility of suffering incapacity or unemployment together. You would then be eligible to make a claim on the insurance should you suffer from either event.

However if you get a good sick pay plan from your employer then you might just want to take out protection against redundancy alone.

You could also choose just to protect against the possibility of suffering accident or illness if this should suit your lifestyle better.

The level of protection you choose to take for your mortgage repayments will reflect on how much the monthly premiums would be. This means that you will only be paying out for protection that is needed.

Other payment protection products

Mortgage payment protection insurance is just one form of cover that could be taken as insurance against redundancy and incapacity. There are two others forms which you might want to consider and these are loan payment protection and income payment protection.

Income payment protection would provide you with an income that could be used towards any financial outlays that you have. You would be able to use the income as you wanted just as you did with your own income. You could use some of it for maintaining your rent, your utility bills and to ensure you had the money for the food bill each month.
Loan payment protection would provide you with an income, the amount pre-agreed by the provider, which would go towards your loan repayments each month. This could stop you from falling behind on your repayments and having to face the consequences. If you fall behind on unsecured loan debts that you cannot catch up on then you are risking losing your home. Missed payments on unsecured loans could mean you lose your possessions to bailiffs.

Why consider taking mortgage payment protection

Maintaining your mortgage repayments is imperative if you do not want to risk losing your home. Some individuals take the risk of being able to rely on savings if they should become unemployed or incapacitated. Others believe the State would provide them with an income so mortgage repayments could be maintained.

You need to prove that you were eligible to claim an income from the State and even if you were the only help you would get for your mortgage repayments is towards the interest part of the mortgage repayment.

State benefits would not pay out for 13 weeks and by this time you would already be in arrears with your mortgage repayments and the lender could already be threatening repossession.

How you can get a great deal on your mortgage payment protection

When taking out the mortgage with the lender they will try to get you to take out mortgage payment protection insurance from them. However by doing so you could pay way over the odds as lenders will usually work out the cost of the protection and then add it into the amount you are borrowing. This means you pay interest on your protection.
Taking cover with the independent provider you can pay premiums for the cover and search around and compare for the best deal on your mortgage payment protection. With some providers you could perhaps save up to as much as 40% on the cost of the premiums.

You could also compare the terms offered by the provider to ensure that you get the right terms on your protection.

The many benefits of mortgage cover

Without mortgage payment protection to rely on your unemployment or incapacity could be a lot more stressful than it need be if you had cover to rely on. With protection behind you that has been carefully chosen you would know when you could claim, how much you had coming into the home towards your mortgage repayments and how long the benefit would last.

If you should become unemployed or incapacitated you would not have the worry of falling behind on the repayments of your mortgage. Mortgage payment protection insurance would allow you time to get out there and find suitable work or allows you the time to make a full recovery and be able to get back to earning your own living again.

It is a fact that for most people our mortgage is the biggest financial commitment of our lives. It is what helps us keep a home around our families and ourselves. Yet unless we sometimes think in terms of “what ifs” we could be risking the very home we work so hard to achieve. That’s where mortgage payment protection insurance in Manchester could help.

The “what ifs”

The chances are that to keep up your monthly payments you need your monthly income. For the vast majority of people that income could vanish in an instant through:

• Redundancy
• Sickness
• Accident.

These situations may affect people differently. If your employer has a very generous sickness or accident cover scheme then this may suffice. For others the risk of redundancy is much lower but the chances of being unable to work through accident are much higher.

Whatever the individual’s situation, these things do happen and if they do one of your first worries may well be just how that monthly mortgage is going to be paid.

The options – hoping to be rescued.

It’s not unusual to find people who believe that the government and their mortgage lenders would save the day if things got bad. They may be sadly mistaken.

If you do get into trouble with keeping up your mortgage payments, the lenders may offer to accept interest only payments for a short period although they are not obliged to do so and some may be less than sympathetic.

If they do, you may also be able to ask the government to help. In certain situations the government will contribute a percentage of the interest-only of the mortgage but this will not include capital. The balance of the interest-only payments would need to be met by you and it does assume the lender has agreed to those reduced payments in the first case.

It’s also worth keeping in mind that the government’s help is partly means-tested. Only those that hold savings below a certain level can claim it. If you have savings above that level the government will expect you to dip heavily into them before they’ll help.

While the application processes are underway and even if all parties do agree to help, the arrears will be mounting and the threatening letters may start to arrive.

The options – mortgage payment protection insurance in Manchester.

It is possible to take out mortgage payment protection insurance in Manchester that will pay your mortgage for you in the event you have an unexpected loss of income. If you claim against it and the claim is approved, your mortgage will be paid each month directly to the lender up to a maximum of 1500 pounds per month or 50% of your gross income.

This can continue until you find new income or to a maximum of 12 months (24 months in the case of some policies). This could avoid the repossession threats and its associated stresses that can easily distract someone from finding new income or getting themselves better.

Claims will only be accepted for involuntary circumstances so things such as pregnancy, voluntary redundancy, career breaks, resignations and some forms of dismissals, will all be excluded from cover. You will probably need to produce evidence of the reason for your loss of income in the form of a statutory redundancy notice or medical certificates etc.

Mortgage protection insurance – who is eligible?

If you are in permanent employment and working more than a certain number of hours per week then you should be able to obtain mortgage payment protection insurance in Manchester cover. If you have a pre-existing serious medical problem or work in a dangerous job then it may be more difficult to find and/or be more expensive.

Mortgage protection insurance – who sells it?

Traditionally the mortgage lenders were major sellers of this type of insurance. They frequently included efforts to sell it during the mortgage application process often leading people to feel they were being pressurised into taking it.

This practice has now stopped.

Although the lenders and banks still sell this insurance, their prices are typically 4 times higher than the same insurance purchased on the open insurance marketplace from the Internet based specialist providers of mortgage payment protection insurance in Manchester. These companies will have a range of products available to suit almost all needs.

The summary

Mortgage payment protection insurance in Manchester can’t stop you losing your job or having an accident. What it can do is offer you some reassurance that should the worst happen, you won’t be in immediate danger of losing your home or needing to spend all your time fighting off the mortgage lender’s demands. It may be worth finding out more.

Buying mortgage payment protection insurance in Northern Ireland can be very confusing if you don’t know what the product does and how it works. For most people, the payment protection insurance portfolio, which includes mortgage cover, is the best opportunity for cover from involuntary redundancy and potentially accident or illness. Unfortunately, many still do not recognize the important of getting insurance in place. Others mistakenly assume the State supports everyone during unemployment or while they are out of work. The truth is that you must be proactive and buy a product that insures your family when your job income is lost.

Along with mortgage cover, you can buy loan protection, and income payment cover to fulfill the need of having monthly benefits payments that replace lost job income. While these three products all offer this basic benefit while you are out of work for a covered event, they have unique intentions. With mortgage payment protection insurance in Northern Ireland, you effectively protect your home by keeping up with your monthly mortgage repayments. Loan protection enables you to meet your monthly loan and credit card payments. Income payment cover is a nice all-purpose solution that allows you to take care of various financial requirements.

Understand more about payment protection

To be eligible to collect benefits under a typical payment protection policy, you have to be employed full time for a period of six months. Retired people, part time employees, and people with pre-existing medical conditions generally cannot get benefits from this category of insurances.

Once you have determined your eligibility for benefits, you need to learn more about the features that affect your policy. One important item is the length of the benefits payout period. Some policies pay benefits over the course of a 12 month period of time, while others payout for 24 months.

You should also find out when your plan would enable you to get your first benefit payment. Some policies would pay as soon as 30 days after the insured event occurs; others don’t make the first payment until 60 days or 90 days later. This can be a big problem for people that are on a tight budget and rely on consistent monthly income.

The highest level of protection available with the typical mortgage payment protection insurance in Northern Ireland is 1500 Pounds or half your regular gross monthly income, whichever is less. Benefits are tax free so the net pay is fairly significant.

Events covered by mortgage payment protection insurance in Northern Ireland

You can protect yourself from involuntary redundancy with a payment cover policy. You can also generally buy benefits for situations where you are out of work for an extended period because of accident or sickness. While this would give you the broadest coverage, some people only buy benefits for one of these events.

Some employers provide benefits to their employees for health-related issues. This leads some people just to buy redundancy benefits. Others do need to pay for their own illness and accident benefits but save on redundancy because they have savings and are likely to quickly find new work.

Carer cover is a unique protection that pays benefits when you are forced out of work because of the need to care for the health of a sick or injured loved family member. It is an extra cover that some providers add to their policies at no additional charge.

Where to find mortgage payment protection insurance in Northern Ireland

Financial institutions controlled a lot of the market for payment cover for years by selling payment protection to loan customers. This practice often led to the borrower being pressured or deceived into feeling obligated to buy the insurance with their loan, despite the fact that premiums were quite high. This bundling of products was a key target of a 2005 super complaint by Citizen’s Advice to the Office of Fair Trading (OFT).

Following the complaint, the OFT asked the Competition Commission to further analyze payment protection to see what changes needed to be made. After its review, the Commission issued several recommendations, including the placement of a seven day waiting period on the sale of payment cover to new borrowers. This helps remove some of the pressure on borrowers to buy their lender’s policy.

You can usually buy mortgage payment protection insurance in Northern Ireland for four times less cost from an independent insurance specialist. Specialists also sell income payment cover for about five times less and loan payment protection for as much as ten times cheaper.

Have you considered mortgage payment protection insurance in Scotland? Anyone who has ever sat down and added up some of their monthly costs may have been surprised by how much they spend per month on some of the most trivial things. However, some things are a little more set in stone, such as mortgage repayments, which can often dominate someone’s expenditure over many years. Because a mortgage is a secured loan, with the property acting as the security, the consequences of falling behind can mean repossession.

This could be more likely if somebody suddenly loses their working income, unless they have considerable savings or other interests to fall back on. However, there is such a thing as mortgage payment protection insurance in Scotland, a simple cover deal which can provide somebody with cash support with their home loan in the event they lose their working income through no fault of their own.

Regular cash

Mortgage protection, subject to a successful claim, provides somebody with regular cash sums towards their home loan repayments in the event they find themselves without their income due to illness, or involuntary redundancy, and injury after an accident. While some people may find their job and health is consistent for many years, one diagnosis or series of cutbacks at work can see somebody lose their income. While employers do have sick pay schemes, if somebody has long-term ailments, they could be off work for a long period, even past their company’s allowance.

Likewise, redundancy packages may not be much to go on, particularly as younger workers who have only been with a company for a limited amount of time can find their package is the equivalent of just a few days’ pay. This is why mortgage payment protection insurance in Scotland is an option for anybody concerned about what they would do to keep up with a home loan if they were out of action.

Payment protection insurance – or PPI - is a common personal finance product which does not only apply to mortgages. Many people use it to cover the repayments on loans and credit cards, while other forms of this type of cover provide somebody with a general replacement income. Mortgage protection, as its name suggests, is designed to specifically help somebody with their home loan. It has been popular with many families because the mortgage is often one of the biggest debts, and the one with the most devastating consequences if someone fails to keep up.

How much cover?

To get a mortgage payment protection insurance (MPPI) policy, somebody simply contacts one of the wide range of insurance providers and explains what they believe they would need per month to provide adequate help with their home loan after a claim. The insurer will then ask them to select all the options before providing them with a premium price. In some cases somebody can insure up to 50 per cent of their regular income, or a top limit of about £1,500 pounds, whichever amount is the least. While insurers don’t allow people to insure an unlimited amount of outlay, most companies will protect enough to provide adequate assistance with the home loan.

Of course, the higher the amount you would expect per month after a claim, the higher the premium would be. Cost is also affected by a kind of waiting period you must undergo after a successful claim before the first payout arrives in your bank account. This can be anything from 30 to 90 days, although you may be able to decide between these options. Somebody who is prepared to wait 30 days may pay more than somebody with an identical policy but with a 60 day or 90 day waiting period, for example.

How long?

Mortgage payment protection insurance Scotland cover typically pays out either until somebody is working and earning for themselves again or until the policy payout period expires. Many deals won’t payout past 12 months, although this may vary.

Some common limitations on this kind of insurance mean that in many cases only those who have held down their current job for a set period, often six months, will qualify. Also, there are some circumstances in which somebody will not be able to claim their payouts. Only those who have been made redundant involuntarily, as opposed to people who have accepted an offer of redundancy, can expect to claim successfully, for example.

Mortgage payment protection insurance in Scotland can therefore provide a very flexible safety net against some of the impact on the ability to keep up with mortgage repayments after losing an income unexpectedly. With the state benefit system and redundancy and sickness packages falling short in many circumstances, an insurance policy like this, sometimes available for just a few pounds per £100 worth of protection, can give greater peace of mind that somebody could get valuable support until they were back on their feet again.

If you have a mortgage you may worry from time to time about what would happen to the roof over your head if you were unable to meet your repayments for some reason beyond your control. A mortgage payment protection insurance policy could provide a solution and peace of mind.

Mortgage payment protection insurance – MPPI - is part of a group of payment protection products which can provide regular payments to cover those all-important monthly bills. As well as mortgage cover there are also policies for other types of loan, for a car for example and for credit card repayments. The payments made from these loan-linked policies would normally be made by your insurer direct to the lender.

Income Protection Insurance is a slightly different type of payment protection policy that will provide a substitute income for you to use as you see fit to maintain your lifestyle and meet your monthly commitments.

The amount of cover that an individual needs will vary according to personal, family and workplace circumstances. Insurers have taken account of this and there are policies that provide cover in the event of redundancy only, or illness and accident only or all three. If your employment provides you with a generous sick pay scheme for example, you may not need additional illness cover.

To be eligible for most types of mortgage protection cover you would normally have to have been in regular permanent employment for at least the past six months and work at least 16 hours per week.

These types of policy are designed to provide cover in the event that you lose your regular income due to being unable to work as a result of illness or accident or having been made involuntarily redundant. If you resign, or accept voluntary redundancy you will most likely not be able to claim on your policy.

The amount of cover provided by a typical mortgage payment protection policy will obviously depend on the size of your own mortgage but would normally be sufficient to fund your monthly mortgage repayment and your buildings insurance. Some policies may have maximum payment limits of around 50 percent of your gross monthly income or 1500 pounds whichever is the lesser. Even if this does not quite cover your entire monthly mortgage payment, mortgage lenders may well be more tolerant of underpayment if the bulk of the payment is being met. It may be advisable to check this out with your mortgage company in advance.

Most mortgage insurance polices will pay out for a maximum of 12 months. There are some, which provide cover for 24 months, but these are less common and will have higher premiums. You will be able to find other types of mortgage payment protection policies that can provide more long-term cover. As you would expect these policies will have their own specific terms and conditions. Premiums will be higher too.

When you make a claim you may have to wait anything from 30 to 90 days for the first payment to be made. The actual length of time varies form policy to policy but will be clearly detailed in the terms and conditions. At the end of the waiting period some providers will backdate payments to the start of the claim so you may not lose out.

If you have to make a claim your insurers will very likely need to have some form of official evidence to support it. This could take the form of a medical certificate if you cannot work as a result of illness or an accident. If you have been made redundant you may need to provide evidence that you are officially registered as unemployed and are actively seeking work. Failure to provide this evidence when asked may invalidate your claim.

Some state aid is available for unemployed homeowners but this is limited to 70 percent of the monthly interest payment only. It makes to contribution to any capital repayments. You would normally have to wait 13 weeks for benefit payments to start and you would not be eligible until you had exhausted your own savings above a specified relatively modest level.

Mortgage payment protection insurance on the other hand is not means tested in any way. As long as you keep on paying the premiums and continue to be eligible under the terms and conditions of your policy, your insurance will meet your mortgage repayments leaving you with your savings securely tucked away.

Even if you initially decide to do without insurance it is perfectly possible to change your mind at any time during the loan period and purchase a payment protection policy. You can purchase them from either specialist insurance providers, many of who operate over the Internet, or from loan companies and other lenders.

In the past some of the bigger lenders took advantage of their positions and mis-sold these types of policies to their customers. They even on occasion mistakenly gave the impression to their customers that taking insurance was a mandatory condition of getting the loan. This is not the case and borrowers who decide they need insurance are free to buy it from any insurer they want.

The upshot of the behaviour of the bigger lenders was that complaints were made to the Citizens Advice Bureau and to the Office of Fair Trading. The subsequent investigations into the actions of the big lenders by the Competition Commission and the Financial Services Authority resulted in heavy fines for some of the lenders and changes to the regulations for the sale of payment protection policies.

It is proposed that lenders will now have to wait for a minimum of 7 days before they can offer a payment protection policy to their customer. So there can no longer be any pressure selling on the part of the lender. This is good news for you because not only are there alternatives to the big lenders out there but also the products that the specialist providers offer are significantly cheaper. Mortgage payment protection insurance can be as much as four times cheaper than an equivalent policy offered by the big lenders. There are good deals out there so there is no need to pay more than you have to for your mortgage insurance.

Adding up all those outgoings when doing the household budgeting can be a dreary yet eye-opening experience – with mobile phone bills, television subscriptions and fuel coming as some of the small but significant costs. However, for many homeowners the biggest expense at the top of that list will probably be the mortgage, which is often also the most binding of a household’s loans. It is significant because it is of course essentially a huge secured loan, with the house itself acting as the security for the bank that you will keep up with the repayments. This is why something like redundancy or long-term illness can be a real threat to those who have a home loan. But mortgage payment protection insurance in Leeds, as it has done across the UK, has given peace of mind for many house holders.

This is a form of personal financial insurance which backs up someone’s ability to keep up with regular repayments on a home loan even if they lose their income due to redundancy, illness, or injury after an accident. In essence it fills the gap created by inadequate state benefit systems and sick pay and redundancy packages, which have their clear limits.

After claiming successfully on a mortgage protection deal a policyholder normally gets tax free monthly instalments from the insurance company to help them with their home loan, and the amount they get can be named by them but must stay within the insurance company’s rules and limits. In many cases someone will be able to buy a policy which protects all of their home loan and attached costs, like council tax and home insurance, while others, perhaps those with a larger mortgage, will not.

For example, a policy holder might be allowed by a firm to set up a policy which provides a maximum of £1,500 per month or half of their regular current income, whichever amount is the least. This is because all forms of this insurance are not designed to replace someone’s income, but provide reasonable help with what could well be a key debt.

The cost of the policy will be related to how much someone would expect to receive per month if they had to claim on their deal, but other factors often come into play to make an individual insurance company’s quote more or less expensive. For example sometimes it’s possible to change what a policy will protect against, so if someone is most concerned about involuntary redundancy, they can often protect against this only and may in doing so reduce the cost of their premium.

Some insurance companies offer some extras as well, which might include something called ‘carer cover’ which will ensure payouts if someone has to leave their job to look after a loved one full-time who is ill. Another flexible element it may be worth looking out for includes how long someone would wait on their policy before a first payout arrived following a successful claim. This can be anything from 30 to 90 days depending on the level of the deal and on the provider.

To get this kind of insurance a policyholder will have to fulfil an insurance company’s set of application criteria, as with other types of insurance. Normally someone will have to be at least 18 years of age and must be a full UK resident. Many companies also ask that someone has been in their current job for a minimum amount of time, perhaps six months.

As with any form of insurance, it’s always worth reading the small print, and mortgage payment protection insurance in Leeds is no different. It’s important to understand some of the limitations, as somebody will not normally be able to claim on a policy for redundancy if they have accepted an offer of redundancy or been sacked from a job. In fact simply being given some form of notification that your job might be at risk before you take out a policy could invalidate your deal, and it could be worth checking with the insurance company if you are unsure.

Mortgage payment protection in Leeds can help people to not only save their credit rating and possibly reduce the chances of repossession, it can also provide a significant psychological boost, as knowing you have something to fall back on if you lost your income as a home loan holder can put someone’s mind at rest even when there is a financial storm brewing. Many policies cost just a few pounds per £100 worth of protection, so could be well worth what might be an extra expense for some people who already have plans to cover their home or car.

Becoming a homeowner with a mortgage is one of the biggest commitments you can make. You take on huge responsibilities not least of which is keeping up with your monthly repayments no matter what. Mortgage payment protection insurance for Liverpool homeowners could help you do just that if you encounter ‘troubled times’.

While no-one likes to dwell on what would happen if they could no longer work for one reason or another, the harsh reality is that redundancies do happen and people do fall ill or suffer from accidents that prevent them from working. Being prepared for such eventualities could make the difference between repossession and keeping the roof over your head.

Mortgage payment protection insurance (MPPI) is one of a group of payment protection products that can provide finance to help you meet monthly your monthly mortgage repayments in such circumstances.

Mortgage insurance can provide cover in the event that you are made involuntarily redundant or if you become unable to work due to a long-term illness or injury and you can choose the extent of cover that you need. If for example your terms of employment include generous sick pay arrangements then you may not need additional illness or injury cover. In this situation you could choose to opt for redundancy cover only.

Policies or this type are designed to offer short-term assistance normally for up to 12 months. A few companies may offer 24-month policies but as you might expect these policies will be more expensive than their 12-month counterparts.

The maximum level of cover you could expect to arrange would be 1500 pounds or 50 per cent of your gross monthly income or the actual monthly mortgage repayment whichever was the lesser. Insurers may also include your building insurance premiums in their cover.

In the event that you have to make a claim you could normally expect to wait anything between 30 and 90 days for the policy to come into effect. This waiting period allows the insurance company to confirm that your loss of income is likely to be long term. Once this period is over however, there are some policies that will backdate payments to the start of the claim.

Some insurers will make payments directly to your mortgage company so you do not even have to get involved in the money transfers.

To be eligible for mortgage payment protection insurance in Liverpool, you will have to have been permanently employed for the past 6 months. It doesn’t have to be full time employment but you do have to work at least 16 hours per week.

If you work in a high-risk occupation or engage in dangerous sporting pass times you should be able to find cover but may find that your premiums could be higher.

You may be asking yourself if you really need mortgage protection or if state benefit could see you through. The fact of the matter that is that state support for homeowners is fairly limited. Help toward mortgage repayments can be available but only after 13 weeks have elapsed and you will only qualify if your savings are below a certain level. Even then aid is restricted to a portion of mortgage interest repayments and no contribution at all is made to the capital repayment so mortgage debt may continue to mount up.

You may be aware of the controversy some time ago surrounding the way that some of the big high street lenders sold their payment protection policies. Some people felt that they had been coerced into buying cover as there had been implications that loan approval was linked to take-up of the insurance offer. Others had been sold policies for which they were ineligible.

The Financial Services Agency and the Competition Commission were involved in investigating the complaints. Some companies received heavy financial penalties and changes have been made to the way that these polices can be marketed. The major lenders can no longer link a policy offer to the loan application process and must wait until 7 days after loan approval before trying to sell this insurance to you.

The big lenders are not the only place where you can buy mortgage payment protection insurance in Liverpool. There are independent insurance suppliers to be found on the Internet who specialise in this type of product.

The evidence shows that their mortgage payment protection insurance for Liverpool homeowners can be up to 4 times cheaper than an equivalent product bought from one of the big lenders. Nobody wants to pay more than they have to for insurance so these independents could be worth checking out.