Mortgage protection insurance works
There is one thing that any policy holder needs of any insurance – it needs to work when it is most needed. Mortgage protection insurance does just that – it works. This is considerably more than can be said of the government’s much-vaunted Homeowner Mortgage Support Scheme, it would appear. Sadly, the latter seems to have failed to prevent some 28,000 homeowners from having their homes repossessed since the announcement of the government’s rescue scheme some five months ago.
A special report in the daily Telegraph newspaper on the 21st of April 2009, revealed the apparent shortcomings in the recently launched Homeowner Mortgage Support Scheme which was set up to give struggling mortgage borrowers the opportunity of deferring their repayments and so head off the prospect of repossession by their lender. Despite the fanfare heralding the government’s bid to help homeowners, however, the failure to put in place the details necessary to run the scheme successfully has still resulted in some 28,000 owners losing their homes through repossession.
Whilst the state-aided scheme might not be working, however, mortgage protection insurance continues to work as surely and certainly as ever. This is the individual homeowner’s own way of ensuring that the mortgage repayments continue to be made, even if the normally relied upon income should be suddenly snatched away. And it is not just the loss of income through redundancy that is covered. Mortgage protection insurance also covers the loss of income as a result of unpaid time off work to recover from an accident or an illness.
Once the policy holder has been off work, or out of work, for a certain minimum period – generally referred to as the “qualifying period” and running from anything from 30 to 90 days – the insurance begins to pay out a regular monthly benefit, which can easily be equated to the amount needed for the mortgage repayments. Premiums are quoted in terms of each £100 of cover purchased, so it is a straight forward question of buying sufficient multiples to cover the necessary repayments. In this way, it will be possible to cover all but the largest of mortgages, since insurance is generally available up to a typical maximum equivalent to 50% of the policy holder’s normally earned gross salary, or £1,500 a month, whichever is less.
Armed with this kind of mortgage protection insurance, the homeowner can rest assured that he or she has cover that will really work – and work for as long as it takes to recover from the accident or illness that kept them off work or until a new job can be found. They can the confidence and peace of mind in knowing that the insured benefits will be paid every month until they have recovered from any incapacity, are no longer unemployed, or for up to a typical maximum of 12 months, whichever is less. Indeed, some policies even offer the option of extending this maximum payout period to up to 24 months, simply by paying an additional premium for the enhanced benefits.