Have you ever thought about what would happen to your family home if you were no longer able to meet your mortgage repayments? The fact is, many homeowners are just one pay check away from losing their home. Mortgage Protection Insurance covers your mortgage repayments when you can’t: in the case of a major illness, redundancy or even death. Here’s what you need to know.
What is Mortgage Protection Insurance?
In order to preserve your families’ way of life should something happen to you, it’s important you are adequately covered so you can feel secure knowing that your home loan repayments will continue no matter what.
A typical Mortgage Protection Insurance policy will cover your mortgage repayments in the event of a major illness, job loss or sudden death. Not to be confused with Lenders’ Mortgage Insurance which covers the lender, Mortgage Protection Insurance covers the policy holder – you, the homeowner.
How does it work?
Mortgage Protection Insurance can be set up on its own or in conjunction with other insurance cover you may have. It’s designed to provide funds to meet your mortgage repayments for a period of time up to a pre-determined value until you are better or until your benefit period expires. If you are entitled to assistance from the Government or cover from another policy, your Mortgage Protection Insurance cover is generally not offset against this amount.
How much cover do I need?
The amount of cover you need will depend on your own personal situation and could include consideration of the following:
• How much is your mortgage debt?
• How long can you wait until your insurance benefit pays out?
How do I find the right policy?
Take a look at these four tips to help you find the right policy:
1. Shop around and compare – Just as you would with your home loan, check what lenders and insurance companies are offering and compare policy benefits and costs.
2. Include redundancy cover – some policies do not automatically cover you in the event of job loss so read the policy documents carefully to ensure you understand exactly what is covered.
3. Check how long you are covered for – ensure your policy adequately covers you for a reasonable length of time in the event of job loss or disability.
4. Check for pre-existing conditions – you won’t be covered for an illness you had when you took out the policy, even if you didn’t know you had it!
Mortgage Protection Insurance cover can differ quite substantially between service providers. As each insurance cover has its own unique benefits and shortfalls, it’s best to talk to your insurance adviser before deciding on the cover that’s right for you.
Contact a Mortgage Express insurance adviser to discuss your requirements and help you make an informed decision.
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While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.
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