You can take out income insurance mortgage protection by way of mortgage payment protection insurance. This is one of a family of payment protection policies taken out to cover the possibility of losing your own income. You can choose to protect against unemployment and incapacity in the same policy or tailor the cover to suit your needs by choosing to protect just against unemployment or just take cover for incapacity alone.
You would be able to choose the amount of your monthly mortgage repayment you want to cover when taking out income insurance mortgage protection with the independent provider. This amount is paid back to the policy holder as a tax free payment should they suffer from one of the events they chose to protect against. There would be a waiting period where you would have to have been unable to work or have been redundant and this would be dependent on the provider. Some might state a waiting period of 30 days while others could ask you wait 90 days before claiming. Your policy could provide you with 12 monthly payments or 24 and then it would cease providing your benefit. Some providers will offer to date back your income to the first day of losing your own to one of the events so this would need to be checked in the terms offered.
You would have to bear in mind that 12 months is a long time and you might be able to recover or find work well within this period of time. You also have to remember that a policy paying out 24 months of income would work out dearer in premiums than one providing 12 months of protection.
Being able to maintain your mortgage repayments is essential for your own peace of mind. Lenders will usually allow you to catch
up on missed payments but any mortgage arrears cause anxiety as if you are unable to catch up on the missed payments you could be at risk of losing your home to repossession. The income from your mortgage cover would provide a substantial sum, if not all of the repayment, towards you being able to keep up to date with the repayments.
If you are considering taking out income insurance mortgage protection then you could alternatively consider another of the payment protection family. Income payment protection is not specifically designed to cover the repayments of your mortgage but it could provide the money for you to be able to continue meeting them. Income cover would allow you to protect a portion of your monthly income. You would then have an income which you would be able to use as you wanted, just as you used to with your own. This means you could keep your essential repayments up to date which of course could include your mortgage outgoings. You could also have an income towards being able to keep up with your utility bills, your grocery bill or if you pay rent as opposed to mortgage repayments you would have the income towards your rent each month.
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