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Mortgage Protection Guide.
Protect your family against the worst happening and keep the roof above your head should the worst happen.
What is Mortgage Protection Insurance?
Mortgage protection insurance covers you in the event of a death or a critical illness occurrence; it is there to protect your mortgage debt in the event of the worst. So that financial worries don’t play a part when the worst happens, you can be financially worry-free and focus on the things that matter: recovering.
Another element of mortgage protection is that if you have a capital repayment mortgage on your property, a product such as the ‘decreasing protection insurance’ option could be selected, saving you on monthly premiums. The way decreasing mortgage protection insurance works is that each month, as you pay down your mortgage debt, your insurance will also decrease along with it, meaning at any point within the policy, whatever your mortgage debt is, your insurance will be able to cover it.
For example, if you move into your home and your current mortgage debt is £100,000, the decreasing mortgage protection insurance amount would also be £100,000. Ten years have passed, and you now owe £60,000. This will also be around the amount your mortgage protection will be, as it has ‘decreased’ along with your mortgage debt.
So why go for a ‘decreasing’ product instead of a ‘level’ insurance product? Usually, it’s down to cost, and a level sum assured will cost more than a decreasing one. We suggest you get quotes for both, and then you can make an informed decision.
How Does Mortgage Protection Insurance Work?
So, now that we know what mortgage protection insurance is, the main question is, how does it work? Mortgage Protection comprises two elements: Life Insurance and Critical Illness Cover.
Life Insurance
In the event of a death, life insurance is there to pay out and support your family and loved ones, covering the costs of death, wages, mortgage payments, and so on.
Suppose you have people who depend on you or outstanding debt, such as a mortgage. In that case, it is essential to make sure you cover for the future so that you do not leave a burden on your loved ones if you die.
When choosing your provider for Life Insurance, it usually boils down to price, as Life Insurance is simple: if you die, a payment is made. But other factors exist, such as the free benefits an insurance provider can provide and the claim payout rate.
Critical Illness Cover
Critical Illness Cover is an insurance system developed to help people financially when suffering from a Critical Illness. Our team here at Protex Financial understands that when you or a family member has been diagnosed with a Critical Illness, it can be an upsetting and worrying time; you don’t need to add financial troubles to that.
Critical Illness Cover is a way to get financial aid (lump sum payout) that you receive should you survive and need help to pay off finances such as mortgage debt.
You may still have a constant income while you or your family member are sick; for example, your employer may pay sick pay, but more often than not, this isn’t enough to cover bills and medical expenses. By taking out Critical Illness Cover, you are giving yourself a lifeboat and the best chance should anything happen.
Different policies cover different aspects of critical illness, but most of the major illnesses are covered by every insurer. Here is a list of the top 10 Critical Illnesses that you could cover;
Cancer
Heart attack
Multiple Sclerosis
Stroke
Alzheimer’s
Dementia
Paralysis
Loss of limbs
Parkinson’s disease
Should I Get Mortgage Protection Insurance In The UK?
Working through your specific requirements is essential to ensuring you get the right amount of Mortgage Protection insurance. Having the knowledge and expertise to understand that not everyone only needs money to help with a funeral, there may be outstanding loan debts to pay, such as mortgage debt too, so it is essential to discover how much you will need to be covered. This will ensure your family won’t be left in debt when the time comes.
In the UK, if you become ill, we are fortunate to have the NHS help with our medical expenses and recovery, but what about the financial help of missing work, death or paying our mortgage payments on time? We have financial aids, but with the time it can take to put in place, as well as the shortfall that could be given, having mortgage protection in force can live this burden, especially if death were to occur to your partner, whom you also live with, and a mortgage is included.
How much does Mortgage Protection insurance cost?
Our team at Protex Financial has been offering mortgage protection insurance services across the UK for many years. Having built up a reputation for providing great insurance and protection services, we have learnt several things. One of them is that all insurance policies are alike, but a few factors come into play when paying for mortgage protection insurance. The cost of your policy will vary for several reasons these are;
Age: Age always affects the price of insurance policies.
Level or Decreasing option: As stated above, decreasing insurance will be less than a level-term policy.
Job: Risky jobs where illness or accident are more likely to incur higher costs.
Amount**:** How much of a mortgage debt do you need to cover?
Term of your mortgage: How long you need insurance can cause price increases.
Smoking Status: Increases policy prices because of the health problems smoking can cause.
Illness or injury: What does your past medical history stipulate? Past illnesses cause price changes due to the risk element.
Mortgage Protection VS Mortgage Protection Payment Insurance
Whereas Mortgage Protection insurance can cover you for life or if you become critically ill, supplying you with a lump sum in the event of a death or a critical illness.
Mortgage protection payment insurance is a short-term insurance product that people take out in case unforeseen circumstances prevent them from working for a period, such as injury, illness, or redundancy.
A lot can take you by surprise in life, including bumps in the road: accidents do happen, people can fall ill, and redundancy is a risk. If any of this happens to you, it will affect how you earn your living.
That’s where mortgage protection payment insurance (MPPI) protection comes in.
Mortgage Safe
MortgageSafe is an accessible, flexible, affordable policy that can protect your client’s monthly mortgage repayments if they have an accident or are ill and can’t work, so they aren’t earning their regular income.
Their accident-only policies have no medical underwriting, and their accident and illness policies are available for 12/or 24 months of coverage. It can cover 110% of the monthly repayment value (monthly mortgage payment), up to a maximum of £1,500.
If you need help with MortgageSafe, our advisors are trained to help with such a product. We don’t charge for our advice.
Summary
The summary is simple: do you have a mortgage? Do you have financial debt you are paying for each month? Then, mortgage protection insurance should be a discussion you have. You need to financially protect your loved ones in the event of death or illness. Ask yourself, what would happen to your family if the worst happened?
We have seen numerous ‘GoFundMe’ pages set up to help people in this exact scenario, when all it would have taken was a simple conversation when they first took out their mortgage.
Please, if you need help setting your Mortgage Protection plan up, do not hesitate to contact us today.