Rather than asking yourself if you can afford to take out UK mortgage protection insurance, you really need to be asking yourself if you can afford not to. Without the cover you would have to rely on savings or State benefits to continue meeting the demands of your mortgage and both of these could be a huge let down. Not only could they let you down, but also you are risking losing the roof over your head.
Getting behind by one or two months would have the lender starting repossession proceedings. Mortgage cover allows you to service your mortgage if you came out of work through unemployment, accident or illness. A policy would begin to pay the sum of money you insured against when taking out the cover after a pre-defined time. This would be the total amount of the repayment for the mortgage each month.
The waiting period would depend on the provider and is usually between the 30th and 90th day. The same would apply when receiving payments; the majority of UK mortgage protection insurance policies would payout either 12 monthly payments or 24 monthly repayments. This can be checked in the terms of the cover along with exclusions which reside in your protection policy.
Exclusions are the main factor in protection that could mean a policy would not work, so you have to go through these very carefully. If you suffer an illness that is classed as ongoing, if you are retired, in self-employment or only work on a part time basis, then you probably would be ineligible. At the least you would have to look very carefully into the wording.
The payment protection sector on the whole has seen some problems in the past. In 2005 mis-selling was brought to the public’s attention following a super complaint by the Citizens Advice to the Office of Fair Trading. The Financial Services Authority investigated the sector and many well known names were given fines for failing to have the consumer’s best interests at heart. While the majority of those fined were those selling loan cover, one of the latest firms that had to payout a hefty sum was a UK mortgage protection insurance company. They not only received a company fine but the CEO also had to put his hand deep into his own pocket and hand over a personal fine. Many changes have been seen and the Financial Services Authority is continuing to watch over the sector. At the same time the Competition Commission is also conducting an in-depth review of the whole sector and it is hoped that many more changes for the better will be seen soon.
However, this should not put you off - UK mortgage protection insurance can provide invaluable cover and should be considered by anyone who has a mortgage to pay. A standalone specialist such as the ethical British Insurance can offer low cost cover that can afford comprehensive protection.
