Mortgage insurance must be understood before you buy

While mortgage insurance could be a lifeline if you should find yourself out of work it can also be nothing but a waste of money if you haven’t ensured that a policy is suited to your needs. If you want peace of mind by taking out mortgage insurance then it is essential that you make sure you understand the product before making the purchase.

A mortgage insurance policy (also called mortgage payment protection insurance -MPPI) can provide you with a tax free sum of money each month to pay your mortgage repayments if you should become out of work due to an accident, sickness or unemployment and once you have been out of work for 30 days.

Good value policies will be backdated to the first day that you came out of work and will continue to provide you with an income for up 12 months and, with some providers, for up to 24 months. If you want to cover your mortgage repayments for just the possibility of coming out of work due to unemployment through being made redundant then you can. You also have the option of taking out the mortgage insurance cover to protect against just accident and sickness or you can cover for all three. Mortgage insurance is also called ASU, accident, sickness and unemployment benefit.

A mortgage insurance policy can be a worthwhile product to have if you should find yourself without an income through being out of work as the Government will give very little help even if you have should qualify for financial assistance. When it comes to your mortgage, without cover you are putting the roof over your head at risk if you can’t find the money to continue paying your mortgage.

When it comes to mortgage insurance, premiums vary widely from lender to lender and the cheapest premiums are often offered by a standalone and specialist provider of the insurance. The difference in quotes from a specialist provider and the high street lender is often huge and of course the specialist provider will know their products inside out and will give good advice regarding the exclusions within a policy.

Exclusions mean factors that could mean you are ineligible to make a claim on a mortgage protection policy and the most common include not working full time, being self-employed, retired or suffering from a pre-existing condition at the time of taking out the policy and trying to claim for this condition. The exclusions are usually within the small print of a policy and it is essential that you read the terms and conditions.

A standalone provider will always make clear the exclusions within a policy along with giving you the key facts regarding a mortgage insurance. It is essential that you don’t take any chances with mortgage insurance and you ensure that a policy is suitable for your needs. If not then you will not only have wasted a great deal of money but you are also at risk of losing your home.