If you are looking for mortgage cover, then there are a number of considerations you have to make to ensure that you get the right deal for you.
However, before we discuss this, what exactly is it?
Mortgage cover – or mortgage payment protection insurance (MPPI) - provides invaluable protection against the financial distress caused by being made involuntarily redundant or being unable to work due to accident or sickness.
Should one of these events happen to you, the mortgage protection policy will step in and provide a tax free amount every month that can be used towards maintaining your monthly mortgage repayments. It can also help towards other mortgage related costs such as life and home insurance and utility bills.
It truly can be a financial safety net at an otherwise difficult time.
So, what do you need to consider when buying the mortgage cover? First of all, you have to read the terms and conditions of the policy you are considering, as they do vary from provider to provider, so always check the small print.
When can I make a claim?
Policy terms vary, so you can typically make a claim from one to three months after you are made unemployed or become too ill to work. Some providers will back date the mortgage cover to the first day of the claim, so you have to check the terms of the individual policy when comparing cover.
How long will I receive the benefits for?
Depending on the individual policy terms and conditions, a policy will pay out the benefits for 12 or 24 months, or when you return to work, whichever event is sooner.
Exclusions
Check out the policy terms and conditions to check that you would be eligible for the cover. There will be some exclusions and these would typically include any physical or mental condition, which you knew of or should reasonably have known about, at the start date.
And if you knew that you were going to be made redundant, again this would not be covered.
Most providers also ask that you have been in permanent full time employment for at least six months before you take out the cover.
People of retirement age would not be covered by most mortgage payment protection insurance policies.
The cost
You might think that taking out mortgage cover is simply another expense you cannot afford or do not need. However, mortgage cover does not need to be expensive.
By shopping around, you can find yourself affordable cover. When bought independently, from a standalone provider such as British Insurance, it can be extremely cost-effective.
Certainly, the price (and policy features and benefits)of mortgage policies do differ depending on where you choose to get a quote from. Historically, the high street lenders will charge more for the cover than the standalone providers. In some cases the difference can be quite a lot so shopping around in order to see what deals are on offer is essential. In the majority of cases, not shopping around could cost you up to 40% more than had you got a quote from a standalone provider.
Independent providers like British Insurance offer award-wining low cost payment protection insurance cover which regularly tops the ‘best buy’ tables of the finance press.
There is little doubt that mortgage cover can provide a financial safety net at a difficult financial time, so as long as you choose yours with care, you can enjoy full of peace of mind knowing that your home is safe no matter what life throws at you.
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