Mortgage Protection Insurance
Mortgage protection insurance is an important part of your mortgage requirements. Your mortgage is one of the largest financial commitments you are likely to take.
Budgeting for your mortgage protection is an important part of the mortgage process, as these payments are often overlooked when calculating how much you can afford to borrow.
Many financial advisors talk of a fully protected mortgage. Detailed below are the main ways to protect your new mortgage.
Fully Protected Mortgage
A fully protected mortgage is simply protecting your mortgage commitment against every eventuality that could occur during the mortgage term. By covering all of these you are secure that your home is covered against virtually every possible pitfall life can bring. These areas of mortgage protection are:
- Death
- Redundancy
- Critical Illness
- Long Term Sickness
- Buildings Insurance
Mortgage protection insurance why ?
Mortgage Protection is not compulsory, the only thing that most lenders will insist on is buildings insurance. So as mortgage protection is not compulsory and no one plans to be ill or be made redundant, when taking out a mortgage, or simply reviewing your existing mortgage, you must ask your self one simple question.
What if ?
Death during the mortgage term
If you died prematurely how would this impact on your family’s ability to repay the mortgage and other bills?
Your protection options are:
- Mortgage Decreasing term assurance
- Level term insurance
- Family Income Benefit
Redundancy during the mortgage term
If you were made redundant how would it affect your ability to pay the mortgage and bills?
Your protection options are:
- Mortgage Payment Protection
Critical Illness during the mortgage term
If you or your partner suffered from a critical Illness how would this affect your ability to repay the mortgage and bills?
Your mortgage protection options are:
- Mortgage life Insurance and Critical Illness
- Level Critical Illness Insurance
- Mortgage protection with integrated critical illness
Long Term Sickness during the mortgage term
If you were unable to work due to an accident or sickness how would this affect your ability to pay the mortgage and bills?
Your protection options are:
- Mortgage Payment Protection Insurance
- Income Protection Insurance
Typical Fully Protected Mortgage Plan
Mortgage protection, as mentioned above, is not compulsory so you could do nothing. However, the cost of doing nothing could quite simply be losing your home. The most common way to protect your mortgage is with the firm foundation of either:
- mortgage term insurance with integrated critical illness for a repayment mortgage
- level term insurance with integrated critical illness cover for an interest only mortgage.
This, at the very least, means your family have a roof over their heads should you or your partner die or sufferer a critical illness during the mortgage term.
This combined with:
- mortgage payment protection insurance to cover your income if you are made redundant or are off work through ill health.
- buildings insurance, if a freehold property.
Taking these polices provides a level of cover that should cover you against the greatest risks to your mortgage and home. An income protection policy can be more beneficial for long term income protection, compared with a mortgage protection insurance that typically pays an income for between 12 and 24 months.
Mortgage Protection Insurance Advice
Do you want independent mortgage protection insurance advice? Simply complete our enquiry form and a financial advisor will contact you to discuss your protection needs.