With a car policy and possible home cover also in place, many people might question why more insurance might be needed. But cover goes beyond mere physical assets, and can even protect your financial circumstances. Many people are particularly concerned about certain debts, especially any which apply to the house they actually live in. A mortgage is a considerable burden, and although it is the main way in which many people are able to afford a house, it involves repayments over a long period of time. Were you to ever struggle, you could face the threat of repossession. This is why mortgage protection is an option for anybody who fears they would get into trouble quickly if they ever lost their job.
This is a form of insurance policy which goes under the protection insurance industry umbrella, or the payment protection insurance sector. If it is often referred to as MPPI by people working in the business. In short, it provides you with regular monthly payouts if you find yourself out of work through involuntary redundancy, accident following an injury, or illness.
The insurance company will simply pay you a regular tax free cash sum, which is meant to go on your home loan costs. How much you get depends on how much you earn, but the normal procedure is to effectively protect a certain percentage. So if you chose 50 per cent cover, and earned £1,400 per month, your payout would be for £700 per month. 50 per cent is the usual level, and policies are available above this, but one hundred per cent protection is rare.
After a successful claim the insurer will continue to pay out for 12 to 24 months, depending on the policy. You can normally expect the first payment to arrive between 30 and 90 days after your claim, and you should check carefully how long the waiting period is.
Some people might question why this might be necessary as the UK has a state benefit system, and companies pay redundancy packages. The reality is that a redundancy package may only keep you going for a few weeks depending on how long you have worked for a firm, while the state benefit system is designed simply to keep someone able to feed themselves. Mortgage protection goes beyond this and helps you to continue to keep up with repayments and the interest, potentially making sure you keep the roof over your head.
Mortgage protection also does not need to be overly expensive, and shopping around a wide range of providers can be helpful. You do not need to simply go to the nearest insurer or the one which already deals with your car cover. Trying a few standalone companies and independent specialists may save you a considerable amount of money on your premium.
Related Posts