Mortgage Protection Insurance
Mortgage Protection Insurance is an absolute must for anyone whose life revolves all around mortgages. Earl Wilson very intelligently summarized the pattern of life in 21st century by saying, “Modern man drives a mortgaged car over a bond-financed highway on credit card gas”. For a normal middle class man, it’s almost impossible to find ways in which he could have all that he wants for himself and for his wife & children, without going through the long and often dark tunnel of mortgage loan.
Over the past few years, the world economy has had its fair bit of rough time. Europe has also seen the effects of the “Global Financial Crisis” more commonly known as the credit crunch that primarily affected North America. Consequently there have been significant lay-offs and more and more people have fallen into that scary category of “Jobless”. Unfortunately that’s not all. Increasing frequency of natural disasters over the past two decades and increase in the number of accidents only mean that the chances of being hurt badly by unforeseen are greater than ever before.
UK so far has enjoyed some strong immunity against all these disastrous events. Financial Gurus believe the next financial crisis is going to strike earlier than expected and this time it’s going to hurt the Euro and the Pound with greater force. All in all, the prediction of next global financial crisis, the ever increasing terrorist activities and the rise in the incidence of accidents, epidemics and natural disasters, combined and weighed accurately, would mean that there is a pretty good chance that if you are one of those who lives his life on mortgage, you may at some point in future be unable to fulfill your obligation.
Mortgage payment protection is a very useful insurance cover which you should buy when you apply for a loan. Like every insurance plan, the true value of this cover lies in the fact that it gives you a feeling of security. Two-thirds of the mortgage lending business in UK is in the hands of building societies. No one likes to lose a grip on a piece of property and that too because of some unintentional, unplanned hitch.
Different insurance companies offer different variations of mortgage protection. In general, mortgage payment protection provides monthly income in case of accident, sickness and unemployment. The income received is a fixed percentage of your last income. To claim this insurance there is a specified time period for which one has to remain unemployed (usually a month). Moreover the mortgage protection insurance does not cover voluntary unemployment, dismissal due to misconduct or breach of contract.
You can apply for mortgage payment protection insurance if
- you’re a resident of UK
- you are actively working on the start date for a minimum number of specified hours
- you are personally named on the mortgaged property
These are the three major requirements that need to be taken care of before buying a policy. It is highly advised though that assistance from a professional financial adviser is sought before buying any mortgage payment protection insurance.