Mortgage insurance can be a safety net on which to land if you should suddenly find yourself out of work after suffering from an illness, accident or if your should become unemployed due to no fault of your own. It can give you an income with which to continue meeting your mortgage repayments. However, as with any insurance, UK mortgage insurance has to be bought with understanding.
There are reasons why it might not be suitable for your circumstances and you have to ensure that it is right for yours. You need to ensure that you are eligible to claim, so check out the exclusions in the small print of a policy. Typically they include if you are only in part time work, you suffer from a pre-existing medical condition or you are of retirement age. Of course there can be others so you have to ensure you know the terms and conditions.
If a policy is right for your circumstances then it would provide an income once you have been out of work for a defined period of time which can be between the 31st day and 90th day of being out of work, depending on the provider. The cover would then continue to provide you with the tax free sum for between 12 and 24 months so that you can continue to repay your mortgage each month without worry of where you would get the money; this gives great peace of mind and takes the stress away while you get back on your feet.
UK mortgage insurance has come under the spotlight with the rest of the suite of payment protection policies when it was found in 2005 that there has been wide spread mis-selling of policies. The Financial Services Authority began an investigation into the sector after a super complaint was lodged with the Office of Fair Trading and several fines were handed out to major high street names. The latest firm to receive a fine since the investigation into the sector began is a typical example – a mortgage firm who failed to have the consumer’s best interest at heart at the time of selling policies.
A lack of information was one of the many problems associated with the mis-selling of mortgage payment protection insurance.
Exclusions weren’t mentioned which led to many people being sold a policy they couldn’t possibly hope to claim against. In March 2008 the Financial Services Authority are going to introduce comparison tables with the hope that these will make policies easier to understand and ensure the consumer gets the right product for their needs. The table will ask a series of questions which will lead to the suggestion of the right policy for an individual’s needs including how much in total the cover will cost, the exclusions that exist in the policy and options for buying.
UK mortgage insurance can be a great asset to have in your corner if you should come out of work, but do check out the small print carefully before signing on the dotted line