If you were to find yourself out of work after suffering from an accident, were to become ill or become unemployed then life could get extremely hard and you could be at risk of losing your home if you cannot keep up with the mortgage repayments. However, the solution to this financial nightmare is mortgage payment protection insurance.
Regardless of your circumstances your mortgage would still have to be paid and if you had checked a mortgage payment protection insurance policy against your circumstances and found it suitable, then you would not have to worry. Once you had been out of work for between 31 to 90 days depending on the provider you would receive an income which would allow you to continue repaying your mortgage. The money would be tax free and would then continue paying out each month for between 12 and 24 months depending on the provider.
However you do have to check that a policy would be suitable and you would be eligible to claim because there are exclusions which could mean a policy would be useless in your circumstances. If you only work part time, suffer a pre-existing medical condition, are retired or self-employed then a policy would not be in your best interest. Providers can add in other exclusions so it is essential to read the small print and compare the exclusions in the policy at the same time as comparing the small print. A quality policy would have no excess and very few exclusions whilst being affordable, it should also come with the terms and conditions including the exclusions clearly explained in plain English.
An independent specialist provider will always offer the cheapest quotes for the premiums along with the best advice and all the information needed for you to be able to make an informed decision regarding the suitability of the product. Mortgage payment protection insurance can be hard to understand so it is imperative that you do choose to take the cover out with a specialist and not have it included into the cost of the mortgage at the time of taking the mortgage out. High street lenders give very little advice regarding the exclusions and terms and conditions which has accounted for the majority of mis-selling and the product earning a bad reputation.
Mortgage payment protection insurance should become more transparent in March 2008 with the introduction of comparison tables. The tables will show how much the cover will cost in total along with the exclusions in a policy and through a series of questions which the consumer answers, they will be able to determine which if any of the payment protection policies are most suitable. The cover can work the way it was designed to work but you do have to take the time to read the exclusions and determine for yourself if mortgage cover is the right choice for your circumstances. Mis-selling of policies is only done through ignorance of the product and it is no the actual policy itself that is to blame.
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of mortgage payment protection insurance
, loan protection insurance and income protection insurance.