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Wednesday, 10 December 2014

What is mortgage protection?

What is mortgage protection?

What is mortgage protection? That is a question many new home buyers ask themselves. Some buyers are very clued up about all the different types of insurances while others only understand the everyday insurance e.g. home appliance insurance, car insurance and travel insurance.

Mortgage protection insurance is very simple to understand, it is a form of income protection that can insure your mortgage payments in case you lose your job, find yourself unable to work or when demise occurs. If your mortgage repayment are not paid then sadly your property could be repossessed by the lender.

Mortgage protection is needed when:

  • You may struggle to keep up with the monthly mortgage payments if you weren't able to work due to illness, accident or forced unemployment
  • You are self-employed and therefore would receive no sick pay or redundancy
  • You don't have sufficient cover from other income protection products
  • You have income protection insurance which will cover your repayments
  • You receive sick pay which will cover the repayments
  • You are eligible for a comprehensive redundancy pay-out which you could live off comfortably until you find another job
  • Government benefits will provide enough money to live on and to pay your mortgage
  • Voluntary unemployment or unemployment resulting from misconduct, fraud or dishonesty
  • If you were aware that you may be made redundant when you took out the policy
  • Pre-existing medical conditions
  • Stress and back-related injuries or illnesses
  • Chronic medical conditions
  • Pregnancy and childbirth
  • Self-inflicted injuries

You will not need mortgage protection if you already have alternative insurance cover:

Mortgage protection policies differ from insurer to insurer. Standard exclusions include:

Before you take out any mortgage protection, make sure to read every piece of paper work carefully and thoroughly. 

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