The very product that is supposed to help the consumer in their time of need can be confusing and hard to understand which means that many times an individual ends up buying a product that they cannot possibly hope to claim and which should never have been sold to them in the first place. The simple fact is that mortgage protection insurance, sold incorrectly, confuses some homeowners.
There are many reasons why mortgage protection insurance can be confusing, the first is the high street lender will push the cover alongside the mortgage while at the same time not always giving out vital information regarding what the cover entails and also without making the consumer aware of the total amount they will be paying for their cover over the term of the mortgage. Mortgage protection insurance when bought this way can add thousands onto the cost of the mortgage over its lifetime and could leave the policyholder open to the risk of losing the roof over their head if they should become out of work.
Sold correctly, mortgage protection insurance provides invaluable cover against the fact that you could find yourself without an income if you were to come out of work through having an accident, suffering an illness or through unemployment through no fault of your own.
Providing you have been informed of the exclusions then a mortgage protection insurance policy would pay out after you have been out of work for 30 days or more and would ensure that you had a tax free income each month to pay your mortgage each month. This income would last for 12 months and in some cases up to 24 months, which would be ample time for you to get back on your feet again and back to work while keeping the roof over your head. A policy can be bought to guard against becoming out of work through accident and sickness only; unemployment only; or accident, sickness and unemployment. The cover is sometimes called ASU which is accident, sickness and unemployment cover.
The biggest factor that has led to several well-known financial companies being fined by the Financial Services Authority earlier in 2007 after a super complaint by the Citizens Advice to the Office of Fair Trading, was that the consumer is unaware of the many exclusions. These include being self employed, retired, or only working part time.
Many policies were sold without ensuring that the homeowner was aware of these conditions which meant that they couldn’t hope to claim on them. The Financial Services Authority (FSA) has fined many leading names for failing to ensure that a policy was suitable for the consumer when it came to the terms and conditions. The investigation and review by the Competition Commission is still underway and should reach its conclusion by February 2009 when it is hoped that changes for the consumers best interests will be made, for at the present, for some homeowners, mortgage protection insurance is just too confusing.
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