How to make sure your mortgage is protected
SUNDAY TELEGRAPH - 7TH MARCH 2004
If you don’t fancy, or can’t afford, an income protection policy, you might wish to consider accident, sickness and unemployment cover, or mortgage payment protection insurance. These cost less because they simply cover mortgage payments if you are forced to take time off work.
They tend to start paying out more quickly – typically within 30 – 60 days of stopping work – but payments normally cease after 12 to 18 months, so if you’re off work for any longer you could run into financial difficulty. Pre-existing conditions tend to be excluded, as are claims for stress-related illness or even back pain – the two most common reasons for taking time off work.
Just about anyone who takes out a mortgage will have been offered mortgage payment protection insurance, which usually involves little more than ticking a box. However, around 80% of the 5.5 million policies sold last year were bought from the lender – and the rates on mortgage payment protection insurance policies bought through lenders tend to be extortionate.
The average cost of cover offered by the major lenders is around £6 a month per £100 of mortgage payment – roughly twice as much as that charged by an independent provider, accordingly to Burgesses the protection broker.
The internet is the best place to turn for a cheap accident, sickness and unemployment or mortgage payment protection insurance policy. Specialist brokers such as Burgesses offer instant quotes, while websites such as moneysupermarket.com and moneyextra.com provide a comparison of the best rates.
