If you are considering buying mortgage unemployment insurance, then there are a number of considerations you need to take in to account so that you get low cost protection without scrimping on the quality of cover.
First of all, let’s take a look at what the insurance does.
Also known as mortgage payment protection insurance (or MPPI), the insurance pays out a monthly tax free sum in the event of you being made involuntarily redundant. This means that you will still have the ability to meet your mortgage repayments and other related costs such as home and life insurance, even without employment.
For an additional fee you can also take out cover against becoming unable to work due to prolonged illness or recovering from an accident (that is what is also known as ASU insurance which stands for accident, sickness and unemployment insurance).
Voluntary acts of unemployment such as voluntary redundancy or dismissal will not be covered by this insurance.
Considerations
First, let’s look at the policy features. As the terms and benefits of different policies can vary, such as how long the cover will run for, so does the period of time you have to wait before you can start to claim benefits. This will be anywhere from 30-90 days after the first day you are made redundanct, so you need to ensure that you choose the cover that is right for you.
Some mortgage unemployment insurance policies will pay out benefits for twelve months while others can run for up to twenty four months. Obviously the latter will be more expensive than the former so you need to think about what would suit you best.
Do ensure that you would be eligible for the cover. Checking the wording of the terms and conditions is essential before you sign on the dotted line as there could be exclusions applicable to your circumstances which would render the protection useless, such as being of retirement age or in part time employment. If your employment is seasonal or casual, typically you won’t be able to claim on a mortgage unemployment insurance policy, either.
The cost
By shopping around the standalone providers, such as protection insurance specialists British Insurance for your mortgage unemployment insurance, you can save around 40% on the premiums, compared to those offered by the banks and lenders on the high street. Premiums for mortgage payment insurance can cost as little as a few pounds for every £100 worth of cover required every month if you buy from British Insurance and their policies have won many awards for their comprehensive good value cover.
As you can see mortgage unemployment insurance really can take away the stress and worry of how you will you manage financially if you were unexpectedly made redundant. For most of us, our mortgage repayments take a huge chunk of our income. How would you continue to pay these without an income? If you were to get behind on your mortgage repayments by even just a couple of months, the lender could start to seek repossession of your home. By investing in a mortgage unemployment insurance policy, you can stop your repayments falling in to arrears and remove the threat of your home being repossessed which is a thought too horrible to even contemplate.
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