Besides reducing how much someone spends on groceries and cutting out some of the other luxuries in life, there are many different measures someone can take to help safeguard them from some of the worst effects of more challenging economic times. There are actually insurance policies which will protect you if you happen to lose your income, for example. One such product is mortgage insurance cover, a policy which could help some people who are worried about what would happen to their home if they were made redundant or could not work for another reason.
Mortgage insurance cover will help protect someone’s ability to keep up with repayments if they are left out of work because they have been made involuntarily redundant. It will also cover eventualities like a long-term illness, or being off work because of injury sustained in an accident. Although it will not normally cover 100 per cent of your mortgage repayments, it will provide a good slice in order to help you carry on meeting your commitment.
Available from lenders, high street insurance companies, and more independent firms, this policy involves a regular premium and requires someone to submit a claim if they feel they need to activate it. Only involuntary redundancy will be covered normally, and those who have accepted an offer of redundancy will not normally be able to claim. Pre-existing medical conditions are also normally not covered. Say someone has, for example, a heart condition diagnosed before they took out the policy - they will not normally be able to get protection for this.
However, once it does kick in after a successful claim, a mortgage insurance cover policy will provide someone with tax free regular payments each month they are without an income due to the reasons above. It will continue to do this for 12 to 24 months, depending on the policy. Some companies offer what is known as carer cover, and this will provide payouts for someone who has to leave their full-time job due to becoming someone’s full-time carer. Normally payments will be enough to help out with repayments, interest on the home loan, and some extras like council tax bills and even home and contents insurance.
As a payment protection insurance product, this section of the insurance industry has attracted some negative publicity. This is because it is still a topic under investigation by the Competition Commission, after some companies were found to have mis-sold policies. However, this applied mainly to firms which sold at point of sale, i.e. attached to home loans. More independent businesses like the ethical British Insurance specialise in only providing cover, and do not supply loans. Firms like this may be able to save someone a considerable amount of money on mortgage insurance cover.
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