Mortgage protection insurance – beats selling!
Despite brave but wildly optimistic talk from the likes of estate agents and government ministers, there is yet no sign of the plummeting price of housing beginning to pick up. Quite the reverse. Prices continued their steep downward spiral during April of this year, to finish the month some 17.7% down on prices for the same period last year. It all makes for a very desperate sellers’ market and one of the best ways of avoiding being forced into a sale is to arrange mortgage protection insurance.
The latest news on the poorly performing home property market appeared in the Daily Mail newspaper on the 6th of May 2009 and is likely to have been met by groans from many homeowners who insist that they have no intention of attempting to sell their property when prices are so abysmally low. If you were dealt the blow of a sudden loss of income, however, and could not afford the mortgage repayments, you could be forced to think again and have no option but to put your home on the market – unless, that is, you had taken the precaution of arranging mortgage protection insurance.
This is a safeguard designed to protect the homeowner against those most common of reasons for suddenly losing the income normally relied upon to pay the mortgage: an accident or an illness that keeps the individual off work for several months at a time (when even the most generous of employer’s sick-pay schemes is likely to have stopped or reduced normal pay), or an indefinite period of unemployment following redundancy. If this should happen and the mortgage repayments become impossible to find, then there will be no need to put the home up for sale, since mortgage payment protection insurance will make the repayments for you.
After an initial wait – of between 30 and 90 days, depending on the particular insurance policy chosen – the policy holder will begin to receive regular monthly payouts from the policy that can be used to repay the whole, or a substantial part, of the mortgage each month. Naturally, the actual amount likely to be needed in benefits each month is decided by the policy holder when arranging the insurance. Since premiums are quoted in terms of each £100 of cover provided, the calculation is easily made and can deliver up to a typical maximum equivalent to 50% of the policy holder’s usual salary from work, or £1,500 a month, whichever is the lesser figure.
Once the benefits are in payment, they continue to be paid on the same date every month that the policy holder remains incapacitated from working or involuntarily unemployed, or for up to a typical maximum of 12 months, whichever is the shorter period. Policy holders might also be given the option when setting up some types of mortgage protection insurance to pay somewhat more in premiums in order to enjoy a maximum payout period of 24 months.