Mortgage insurance cover: does it do the job it’s supposed to do?

Unfortunately some people have found the answer is ‘no’ to the above question only when they have come to make a claim on their policy and found that due to the exclusions within their policy they aren’t eligible to make a claim. It is essential that you ask yourself the above question before you buy your mortgage insurance cover, not after.

Mortgage insurance cover is an insurance policy that, when bought correctly, can provide you with a monthly fixed income which is tax free and which would start to pay out after you have been out of work, typically after 30 days, due to accident, sickness or unemployment. The majority of policies pay out for up to 12 months and in some case for up to 24 months, depending on the provider and policies can be taken to protect against unemployment alone; accident and sickness only; or for all three.

However, you have to make sure that you would be eligible to claim against your mortgage insurance cover policy and this means making sure you read the small print which contains the exclusions and the terms and condition of cover.

The mis-selling of protection policies, of which mortgage insurance cover is one, was highlighted in early 2005 after a super complaint was made to the Office of Fair Trading by the Citizens Advice. Following this an investigation by the Financial Services Authority (FSA) cumulated in several well-known companies being fined for the mis-selling of protection policies.

Mis-selling of the protection included not making sure the consumer understood the product before they purchased their policy - such as any exclusions. Examples of this include selling protection to those who are retired, those who are self-employed and not making sure that the consumer understood that any pre-existing medical conditions at the time of taking out the policy would be excluded.

Along with this, some high street names were found guilty of coercing their customers in to buying the insurance and not making it clear that the cover can be purchased independently, often for a much cheaper cost.

Mortgage payment cover can be an essential product as it could make the difference between you losing your home if you haven’t got an income with which to meet your mortgage repayments or keeping the roof over your head. When purchased sensibly it can do the job it’s supposed to do, but it is essential that you take the time to shop around for the cover and choose to buy it from an independent specialist provider.

A specialist can save you a lot of money on the premiums for the mortgage insurance cover along with selling you a quality product and giving the essential advice needed in order for you to make the right decision over the policy’s suitability for your circumstances. Always make use of this advice and never be afraid to question the lender if you are unsure of anything before you commit yourself to mortgage insurance cover.