Mortgage protection insurance protects your repayments against the possibility of losing your income to unemployment or incapacity. If you should suffer from either of these events you would still have to maintain your repayments to keep on top of your repayments. If you have nothing to fall back onto and fall into arrears you would be risking losing your home to the lender.
How mortgage cover is taken out
You do have some choices for taking our mortgage protection insurance. Taking out the protection with your mortgage usually means that you will pay far more for the protection that what you could if you choose a standalone provider for your insurance. Lenders will usually include mortgage protection for the whole of the mortgage, add it in with the amount you borrow and this of course means you pay interest on the payment protection.
When you take the protection with a standalone provider you are quoted a monthly premium. This premium would be based on your age, the level of cover taken and the amount of your mortgage repayment you choose to cover. This amount is agreed by your chosen provider and is the amount that you get back if you should fall victim to one of the events you choose to protect against. The income would be paid back as a tax free sum once you had been unemployed or incapacitated for a certain period of time. This would usually be between the 30th and the 90th days with some providers offering to date back the cover to the first day of you falling victim to unemployment or incapacity.
The levels of cover you can choose to take
If you have chosen the standalone provider as your payment protection specialist then you would be able to protect your mortgage repayments against the possibility of unemployment and incapacity together. However if for example you get full sick pay from your employer then you might not need to protect against incapacity. In this case you could choose to take cover solely against the chance of you becoming a victim of redundancy. However if you do not get sick pay then you might want to protect just against the chance of incapacity alone, this means the protection is very versatile.
If you are a younger home buyer then age based mortgage protection insurance could be a Godsend as the younger you are when applying for cover, the cheaper the premiums will be. Very often the younger buyer takes on a huge mortgage that pushes their outgoings to the limit and which leaves little over for protection. With age based cover the premiums become affordable.
Related Posts