Should You Take Out Protection Insurance Alongside A Mortgage?

If you fall ill, suffer an accident or find yourself otherwise unable to work and not earning for any length of time, how will you manage to keep up with your mortgage repayments?

Because this is a realistic concern, if albeit an unfortunate reality for some, many mortgage lenders incorporate into their mortgages protection insurance to safeguard individuals against such circumstances. Hence, protection Insurance is exactly that – it protects and insures a mortgage buyer against finding themselves unable to afford their mortgage repayments because of an accident, injury or illness.

How Does Mortgage Protection Insurance Work?

Protection Insurance works a lot like many life insurance policies or in a similar manner to statutory sickness pay; if you find yourself suddenly unable to work through an accident, illness or injury, protection insurance can replace your usual incomes to ensure you do not fall behind with your mortgage repayments.

Like statutory sickness pay, protection insurance is subject to a ‘waiting period’ before it is payable to a claimant; if, when you fall ill you initially receive sickness payments from your employer, you will not for that time usually receive a pay out from any protection insurance you have taken out. Instead, payments will begin if or when your sickness payments cease, if you are still unable to return to employment at that time.

How Is Protection Insurance Paid?

Unlike sickness pay, there is no set limit on how long you can claim protection insurance payments. Rather, you will usually receive payments in place of your wage until you are either able to return to work or you retire, if you happen to retire before your recover or opt to take voluntary retirement because you are unwell, injured and / or facing the prospect of not recovering enough to return to work.

It should be noted that unlike both critical illness insurance and short-term income insurance, there is no limit as to how long protection insurance is payable; the duration for which you will receive protection insurance payments will only be determined by the duration of your illness or health problems, or until your policy expires. Further, protection insurance does not provide a claimant with a one-off or ‘lump sum’ payment, like most critical illness policies. A person is able to claim against their protection insurance as many times as is necessary in the course of a policy and most often will claim to receive a monthly sum equal to approximately half or just over of their normal gross salary.

Should I Invest In Mortgage Protection Insurance?

Whether to invest in protection insurance is a question every potential mortgage buyer should ask themselves. The answer though requires some thought, research and is often where a mortgage broker can step in to help and offer their expert advice.

Because protection insurance policies are tailored to the needs of those taking the policy out, negotiating the terms of a policy can often seem complicated and confusing. There are a myriad of situations, considerations and factors which need close attention and careful thought before taking out protection insurance. Fortunately, we here at Search Mortgage Solutions, are experts in getting you the best and the right deal when it comes to Protection Insurance – and whether you need it. To find out more, visit the mortgage protection insurance section of our website.