Understanding Mortgage Insurance Protection
While life insurance understandably attracts larger levels of interest, mortgage insurance protection offers blanket coverage for your loved ones and it can usually be factored into a standard life insurance policy purchase very easily. Life insurance offers a cash settlement for beneficiaries when the policyholder dies but mortgage insurance protection will help to maintain mortgage payments if sickness or an accident prevents you from working.
How Mortgage Insurance Protection Works
Mortgage insurance protection is usually taken out when life insurance is purchased. The majority of plans will maintain your mortgage payments during periods of incapacity up to a maximum term of one year. Although it is possible to make multiple claims on the same policy, it is unlikely that your insurer will allow them to be paid out on a continuous basis.
Statutory sick pay will not affect the payments you receive under the terms of a mortgage insurance protection plan but you may have to accept reduced payments if your employer pays over and above the standard rates.
Worried about Losing Your Job?
Job uncertainty and the continued escalation of the global economic crisis have increased concerns over mortgage repayments. With many major industries struggling to survive under the current recession, more and more homeowners are looking towards mortgage protection as a means of providing a short-term solution if they suddenly find themselves unemployed.
Before taking out a mortgage insurance policy, take time out to talk to your employer and discuss the company procedure for compensating staff in the event of redundancy. If you are likely to receive a settlement from your employer, you may not need to enhance your current levels of life insurance cover.
How are Payouts Made
Mortgage insurance begins to pay out after 30 to 60 days of incapacity or unemployment. In most cases, payouts will be backdated and any benefits you receive will be made from the very first day you found yourself out of work. It is important to note that payments are usually capped at a maximum of £2,000 per month, or at a set percentage of your income level at the time the policy was taken out. If you have a large mortgage, you might need to consider how surplus payments are going to be made. Mortgage protection can also be purchased online on a standalone basis. Find out more about other options for life insurance direct by filling in our 30 second form today.