Mortgage protection insurance could help you to remain in your home if you should lose your income. You might suffer from a loss of income if you were to become a victim of unemployment or you might suffer from incapacity caused by accident or illness and be unable to work. You could take out a policy that would pay an income that was tax free if you suffered either event.
To take your mortgage protection insurance you first have to work out how much of your repayment you want to cover. This amount would have to be pre-agreed by the provider as it is the income that you get back each month for up to the term of the policy if needed. You would need to wait for so many days before being eligible to claim on your mortgage policy and this would generally be within a period of between the 30th and up to the 90th days. Your provider could offer to date back the policy to the first day of your unemployment so check in the small print. Also find out before you take out the policy how long your provider would pay out your income. Usually providers will offer benefit payable over 12 or 24 months. You would get your income for up to this time if needed and then the policy would cease.
You would also have to decide on what events you wanted to cover your mortgage repayments for. You could protect against redundancy and incapacity together in the same policy and have security of being able to claim if you became a victim to either event. You might also choose just to protect against the possibility that you might suffer incapacity alone, or you could choose just to take out a policy against redundancy alone should this suit your needs more. Your provider could also include carer cover in your protection. If they do then you would be able to claim on your policy to take care of a family member if they were the one to become a victim to incapacity.
With mortgage protection insurance behind you there would be the sum of money you chose to protect coming into the home and this could be used towards you servicing your mortgage repayments each month which would greatly ease any worries regarding mortgage arrears. These should be avoided at all cost as if you find that you are unable to repay what you have fallen behind on within a certain amount of time you could be at risk of losing your home to the lender. Even the most lenient of mortgage lenders will only give you so much time to catch up on your arrears so any amount of arrears are a potential risk.
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