Mortgage protection insurance allows you to secure a portion of your mortgage repayment against the possibility of unemployment or incapacity. You could choose how much of the monthly repayment you make each month for your mortgage that you want to protect and if this is within the limits defined by the provider it would be your replacement income, tax free for up to the term of the policy if needed.
You would have to be unemployed or incapacitated for a period of time before making your claim and this would generally be within the region of 30 to 90 days although some providers could pay out on the 60th day. You would then be entitled to claim this money each month for up to the term which could be 12/24 months. Some providers could also date back your income to the first day that you became a victim to unemployment or incapacity. The income from your policy could be enough to stop you from falling into debt with your mortgage repayments which could eventually lead to you losing your home.
Mortgage protection insurance could be taken out to safeguard against unemployment and incapacity together or you could choose to tailor your policy to suit your lifestyle. If you wanted to take out insurance just for protection against unemployment you could or you might just take out protection against incapacity if it suited your lifestyle better. Your provider might also include carer cover in your protection and if so you could make a claim on your insurance if you were to have to give up work to take care of a family member who became incapacitated.
When considering mortgage payment protection you do have to bear in mind that there will be exclusions that have to be checked against your lifestyle. The provider could have added in just the most common exclusions or there could be many. These would need to be checked against your lifestyle as they could stop you from claiming on a policy. An ethical provider will always give you the information needed to check suitability.
Your mortgage protection insurance could be a more secure plan to fall back on than risking being eligible to claim your income from the State. Should you be entitled to claim a State income then you would only get help towards maintaining the interest of your mortgage and up to so much. This could leave you struggling to find the rest of your mortgage repayment which could again leave you faced with mortgage arrears and the possibility of losing your home. Were you to risk using savings as a means of servicing your mortgage repayments each month then you could also be let down. Your savings could deplete well before you had found work or recovered from your illness or accident and again this could leave you with a struggle on your hands.
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