When you choose mortgage protection cover independently you can save a great deal on the monthly premiums. In some cases this can be up to as much as 40% on the cost of the monthly premiums. A policy would certainly be a great deal cheaper than if you take your policy with the high street lender when borrowing. You would also have more choice as you could tailor the cover to suit your needs. A policy is insurance for your mortgage repayments against the possibility of suffering an accident, illness or becoming redundant.
One of the choices you have when taking your mortgage protection cover with a standalone provider is how much of your mortgage payment to protect. This amount would be limited by the provider as it is the sum you get back from your policy should the need arise to make a claim. This income is tax free and would be paid once a period of deferment has passed. This would usually be 30 and 90 days from the first day of you suffering incapacity or unemployment. Payments would continue each month for 12 or 24 months, should you need to claim that long which again is dependent on the provider. Some will offer to date back your income the first day of your unemployment or incapacity and this also needs checking before taking out the insurance.
A 24 month policy would cost more in premiums than one paying out for 12 months so when comparing the cost this should be remembered. Payments lasting 12 months could be more than is needed as you could have recovered and got back to work or found work well before this time.
Mortgage payment protection can be taken out to protect against the possibility that you could suffer from unemployment and incapacity together. In this case you would be eligible to make a claim if you suffered from either of these events. However you might just want to insure against the chance of becoming redundant if you have an employer that pays a good sick pay plan. You could alternatively just want to cover the chance of losing your income to incapacity if this should suit your needs better.
Mortgage protection cover does a great job of protecting your mortgage repayments each month and could be a more reliable form of protection than using your savings or risking being able to claim an income from the State. You would have to provide eligibility to claim State benefit and even if you are any money from them would only be towards any interest repayment on your mortgage. There would also be a waiting period of several weeks during which time you could already be in mortgage arrears of 3 months. If relying on savings you would have to consider if they would last for the duration of your unemployment or incapacity. It could take you several months before you found work or recovered enough for you to have been able to go back to your own position and savings could have run out before then.
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