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[H546]Home Mortgage Protection Insurance

by Sean Horton, Sea

Mortgage payment protection insurance (or MPPI) is an insurance product that can help you keep up with your monthly mortgage repayments in the event that you lose your income due to involuntary redundancy; recovery from an accident; or prolonged illness. This means that at an already stressful time, you will not have to worry how to keep your home safe from repossession.

You may think that you will never need to use this type of insurance policy, but anyone of us is vulnerable to redundancy, especially in an uncertain economic climate. And having an accident or being hospitalised due to illness, with a long recovery period afterwards, is something that can happen to anyone. You simply cannot put a price on the peace of mind that a mortgage payment protection insurance policy could give you.

So, how does the cover work?

Well, the mortgage protection insurance will start to pay out a tax free monthly sum anywhere from thirty to ninety days after you are made redundant or become incapacitated. The waiting period depends on the individual policy terms and conditions so do check this when looking for your cover.

The sum you receive can go towards maintaining your monthly mortgage commitment as well as associated costs such as home, life and critical illness insurance, up to the provider's pre-agreed payment limits of course.

Back to day one benefits

Some providers will also back date your claim to the first day of your illness or unemployment – this is often known as ‘back to day one' cover – so, again, check out the policy features and benefits to see if your policy affords you this.

Protection for up to 24 months

Once the benefits have started to pay out, these will run until you get back to work, or for anything up to 12-24 months - whatever happens sooner. Some mortgage payment protection insurance providers will offer cover that pays out benefits for 12 months while others offer protection for 24 months, so make sure that the policy you choose is one that best suits your requirements.

Where to buy?

Knowing where to buy your cover is probably the most important aspect of getting the right cover for you. Typically you would have been offered your mortgage payment insurance at the time of taking out your mortgage borrowing. However, as numerous studies as shown, this can be an expensive way to buy your cover. Banks and lenders have been known to charge high premiums for the cover in order to make a hefty profit. However, choosing to buy your cover from an independent provider can often see you get a better deal, and a policy that sometimes has additional benefits thrown in that the mainstream cover does not offer, such as the back to day one cover.

Compared to the price of the cover from the traditional sources, standalone providers of mortgage payment protection insurance can often save you around 40% on the cost of the protection, making it an affordable solution for anyone seeking to protect the roof over their head.

Suffering an illness which was to keep you from working would be devastating enough without having the additional worry of where you would find the money to be able to continue paying your mortgage. If you were involved in an accident that meant you couldn't earn a living would also leave you in the same predicament and could mean you would have to take months off. If you were to become unemployed by cutbacks in the company then you could also be looking for work for many months before finding a suitable position. Mortgage protection insurance would be able to get you through by providing you with a tax-free income each month.

Depending on your circumstances you can protect against all three possibilities or you can choose the level of cover which would be more suitable for your lifestyle. If you only want to protect against losing your job through unemployment then just take out unemployment insurance. If worried about losing your income to an accident or sickness then take out cover for this alone. The level of cover you choose to take out when getting a quote for mortgage protection insurance will reflect on the quote as does your age. This means that younger homeowners can protect their mortgage repayments far cheaper.

Mortgage protection insurance will be offered, and in some cases pushed, at the time of borrowing with the lender on the high street. However just because you got an excellent deal on your mortgage this does not means you will be given the cheapest quote to protect the borrowing. In the majority of case if you choose to buy cover independently you can get cover a lot cheaper.

Policies vary in cost and what is and is not included, this means that you have to take your time when comparing and also compare the terms and conditions. Exclusions can be found and some providers add-in more than others, along with this the starting and end dates will vary with providers. Some will start to provide the policy holder with their income after becoming unemployed or incapacitated for 30 days. However other providers might have you wait for as long as the 90th day before paying out. There are some providers that will backdate their policy to the first day of unemployment or incapacity which means you do not lose out.

Never be tempted to rely on receiving help from the State automatically if you should lose your job or have to take time from work due to accident or sickness. State benefits can take months to start providing for your mortgage and then only for the interests part up to the first ?100,000. You also have to meet many terms and conditions which could mean you are not eligible for benefit. If you do not keep up with your mortgage then you are risking having your home repossessed. A far better back-up plan if is suitable is mortgage protection insurance. You would be able to relax and just concentrate on getting well and getting back to work or the cover would give you the time needed to find work again.

Article Source : Pg. 264

About Author

Both Sean Horton & Simon Burgess are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Sean Horton has sinced written about articles on various topics from Finances, Mesothelioma Lawyer and Finances. Sean Horton is a Director of Enhanced Wealth who offer competitive mortgage insurance cover for and. Sean Horton's top article generates over 90500 views. to your Favourites.

Simon Burgess has sinced written about articles on various topics from Mortgage Insurance, Finances and Income Protection Insurance. Simon Burgess is Managing Director of the award-winning , a specialist provider of. Simon Burgess's top article generates over 74000 views. to your Favourites.