Have You Considered Taking Out Mortgage Protection Insurance? By Simon Burgess At Isnare.com Ezine Articles

While none of us likes to consider the fact that we could suffer an accident or illness. Or stop to give thought to being made redundant, it does happen. If you are not prepared for this eventuality then you could be at risk of losing your home. Mortgage protection insurance can be taken out to ensure that this would not happen.

A policy would begin to provide you with a tax-free income to protect against all three. It can also be taken to guard against unemployment only or for accident and sickness only. The amount that is charged for the premium will be based on this fact and your age and type of cover you choose to take.

If you were to find yourself without an income then you could turn to savings or the State. However, both could let you down and are not viable as a back-up plan. Savings would soon run dry if you were to remain unemployed or unfit for any length of time. When it comes to State benefits then you would have to be eligible to claim. You must be receiving income support and not have a partner living with you that is in full time employment. If your mortgage was taken out after October 1995 then you could be waiting for 9 months before receiving help. Once you did, you would only get benefit for the interest part up to the first £100,000.

A mortgage protection insurance policy does come with a waiting period before making a claim. However, this is only between day 30 and 90 and some providers will backdate to the first day. The policy would payout the sum that was defined when applying for the policy. This is how much your mortgage payments are each month including essential related outgoings such as insurance. This means that you have the full monthly payment to continue paying as normal. Once the cover has kicked in it would continue to provide the policyholder with security of an income for between 12 and 24 months. This in the majority of cases is enough time to get back on your feet and return to work or to find another job.

Mortgage protection insurance did come into the spotlight in 2005 when the Office of Fair Trading received a super complaint from the Citizens Advice regarding the mis-selling of payment protection insurance products. Following this, an investigation was made by the Financial Services Authority (FSA), which resulted in several firms receiving fines.

High costs and mis-selling have meant that faith has declined in the sector when it comes to payment protection insurance, of which mortgage protection insurance is one policy. However, this could change with the introduction by the FSA of comparison tables. The tables will make understanding cover easier. It will also help the individual decide which type of policy would be the most suitable through a series of questions and answers. It also has to be remembered that it is not the products that are at fault but those who sell them with little or no experience.

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