Tips on Mortgage Payment Protection Insurance

With rocketing fuel and food prices, few people need the newspapers to tell them that distinctly rocky economic times lie ahead. The news has already made itself felt in practically everyone’s pocket. Nevertheless, it is at difficult times such as this that it is worth spending just a little more of that precious cash on mortgage payment protection insurance.

Why you might need it

You will probably remember the struggle you faced trying to get that first foot on the property ladder. The last thing you would want, therefore, is to default on the mortgage repayments and risk losing the home you had worked so hard to buy. But if your regular monthly salary should suddenly disappear – because accident or sickness incapacitates you for work or because you have been made compulsorily redundant – there could be little option but to miss the mortgage repayments.

Mortgage payment protection insurance would ensure that your mortgage continued to be paid, even while you are unable to work or temporarily unemployed.

How much cover to buy

Calculating how much protection you need to buy is simplicity itself. You know what your monthly mortgage repayments are, so that is the sum you would need to cover if you wanted the payments made in full during a period of incapacity or unemployment.

Don’t forget, though, that it is also usual to include the cost of mortgage-related insurance premiums – such as life insurance and buildings and contents insurances on the property itself. Policies will carry a maximum amount that can be covered by this insurance – typically, a total of £1,500 per month or 50% of the policy holder’s normal monthly income, whichever is the smaller – but remains quite generous enough to cover the majority of circumstances.

Qualifying claims

Policies will define the “qualifying” period during which the policy holder must be incapacitated or unemployed before any claim becomes payable. Generally, this will be a period of 30 days, although 90 days is not uncommon. It would be a good tip to choose the shorter period if you want the insurance benefits to be payable sooner than later.

Another aspect to take into account is whether your claim will be backdated to the first day of any period of incapacity or unemployment. Some policies will treat the “qualifying” period as a form of excess and you would need to wait until this time has expired before the benefits become payable.

As with all forms of insurance, of course, it is a question of weighing up the benefits offered against the price of the premiums you will be paying.

Exclusions

Similarly, as with any type of insurance, you will do well to make sure that you have read and fully understand the exclusions relating to your mortgage payment protection insurance. Although the insurance provider, or your independent financial adviser, will be able to help explain any details that remain unclear, it is ultimately your own responsibility to ensure that you are buying the cover you need and that you know from the outset under what conditions any claim might be excluded.

Why Buy from British Insurance

Their staff are friendly, well trained and based in the UK
British Insurance are a multi-award winner
They are recognised consumer champions and market leaders
They are regularly recommended on the TV and Radio, including ‘Tonight with Trevor McDonald’ and the ‘Money Programme’
They are independent and FSA authorised