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Mortgage Payment Protection Provides A Tax-free Income

Jun 2, 2008
When your mortgage repayments come round each month you have to have the money to be able to pay it. If you do not then you will get a letter from your lender asking why. Miss another repayment and you are looking at having repossession proceedings brought against you and losing your home. If you lose your job and income to unemployment then it can take months to find work again and your mortgage lender would not wait for you to get back to work. Falling ill or suffering an accident could also mean you would have to take months from work and not have an income. Mortgage payment protection would provide you with a tax-free replacement income for all of these eventualities.

Mortgage payment protection is usually offered alongside the borrowing when taking out the loan. Lenders will try to get you to take it this way as they make huge profits from the cover. However you do have a choice of where you buy your protection and your mortgage should not be threatened if you choose to buy a policy independently.

Buying from a standalone provider provides you with more benefits than being able to make savings. This is also the best way to get the information needed to make an informed choice regarding the policy you are considering buying. You can choose to take out a policy to safeguard against all three possibilities of losing your income, accident, sickness and unemployment. However you might only need to take out cover to guard against unemployment only. Some providers will allow you to tailor your policy like this. You could also just take out protection to insure against a loss of income due to accident and sickness only. This is excellent as the cost of the cover will be based on this along with your age. As providers offer age based mortgage payment protection this makes protecting the mortgage more affordable to the younger generation.

When choosing a policy you have to take factors into account such as how long the cover would protect you and when it would start to payout. Some policies begin providing you with the benefit from the policy after unemployment or incapacity of 30 days. With others it can be 90 days, some will backdate cover to day one of you coming out of work through accident, illness or unemployment. Once you have claimed on the policy and have started to receive an income it would only last for a certain period, which is usually adequate time. Providers offer cover for a period of 12 months, while some would offer an extended period of 24 months so you have to check in the terms and conditions before buying.

You also have to consider the fact that the mortgage payment protection policy would only be as good as they provider selling it. With this in mind you should also check out the company you take the quote with. Look at their background and see how long they have been in business. Also look for a provider that gives plenty of advice and information up front about their policies before you buy.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of mortgage payment protection .
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