When it comes to mortgages and ensuring we can always pay them, certain things are obvious, and other things a lot less so. What isn’t in question for most of us is that our mortgage is one of the biggest ongoing financial commitments we have, or even the biggest of all.
But does it automatically follow that you should therefore seek out a mortgage protection insurance policy?
Introducing mortgage protection cover
Before we go any further, let’s be clear about exactly what mortgage protection insurance is. It’s a type of protection insurance where you pay monthly premiums. In return, in the event that you are rendered unable to cover your mortgage payments as a result of long-term sickness or disability preventing you from working, you will be able to receive monthly tax-free payments.
As the name of this type of insurance indicates, it is designed to help policyholders pay off their mortgage. Sure enough, depending on the provider, you might ask to take out a policy that solely covers your mortgage costs, or you may wish for it to also cover other bills you might have. If you request the latter, the provider will typically cover 125% of your mortgage costs.
When might mortgage protection insurance most make sense?
There are certain circumstances in which purchasing a mortgage protection policy may be a particularly wise decision.
If you have a partner, you might be worried that in the event of something happening to you that would prevent you from keeping on top of your mortgage payments, you would be at risk of losing your home. In that situation, having mortgage protection insurance in place could ensure your household is able to continue paying off the loan.
Similarly, if you were to become a parent, that’s a big responsibility, and you will understandably be anxious to make sure that if you were unable to continue working for whatever reason, your young family would be able to keep on living in their home. A mortgage protection policy could help with that.
But mortgage protection insurance might not be the perfect match for everyone. You may, for instance, have savings you could use to pay off a mortgage if something adverse did happen to you, or your partner’s salary might be sufficient to cover it.
Alternatively, your situation might be more ambiguous - for example, you might have enough savings to keep on paying off your mortgage for a certain period of time, but not indefinitely. In that case, you might consider still taking out a mortgage protection policy, but putting in place a longer waiting period to begin receiving payments. A great advantage of this course of action is that it can help reduce the cost of your premiums.
Don’t be afraid to talk to us for more tailored advice
The above effectively just dips a toe into the world of mortgage protection insurance, and indeed, you may eventually conclude that an alternative product or strategy would be the best one for you.
Whatever your situation, why not get in touch with a UK adviser who can also present you with a no-obligation quote for a suitable product for free? Simply call 0800 316 6917 now to learn more about what the QuoteLifeCover team can do for you.