Mortgage Protection Policies

If you are looking to buy a new home, you’re no doubt probably being swamped with the amount of information that is involved in the often long process. Whether it’s your sales agent calling you with changes to the sale, or your lender trying to sell you extra packages that they say you need, it can be a mind-boggling time, to say the least.

However, one thing that does need your attention in all of this is the matter of whether to take out a mortgage protection policy or not. On the one hand, it’s an extra cost on top of an already expensive venture; yet on the other hand, it’s such a potentially important addition to your mortgage that you really should be looking at it in more depth.

If you’re unsure whether to take out a mortgage protection policy, then all you need to do is look at how you think the next 25 years is going to pan out for you, and that should help. There are also some figures that might help make your mind up as well.

What Is A Mortgage Protection Policy

A mortgage protection policy is a simple insurance policy that protects your home should you fall on financial hardship either through unemployment, illness or accident. Instead of worrying whether you’re going to be able to afford the monthly payments on your house should any of these things happen to you, a mortgage protection policy will take care of this for you.

The kind of policy you have taken out will determine what payments are made for you, and for how long. The normal length of time that you can rely on a mortgage protection policy covering your payments is 12 months, although this can be dependent on the policy and your circumstances.

There are three main types of cover available to you:

• Unemployment and incapacity will give you the fullest protection possible, and cover both illness and accident, as well as losing your job

• Unemployment only will just cover you for losing your job

• Incapacity will only cover you for illness or an accident preventing you from working

Why Should I Have A Mortgage Protection Policy?

No-one can predict the future, especially a timescale of 25 years, which is the average length of a mortgage in the UK today. You can fall ill, have a major accident, and we all know that there’s no such “job for life” anymore.

Couple this with the fact that you’re 20 times more likely to suffer a long-term illness than die before you’re 65, and you can see why having a mortgage protection policy is almost an easy choice to make. All you really have to decide is what one to go with, although unless you’re self-employed, it shouldn’t be anything other than the unemployment and incapacity option.