Tips For Protecting Your Mortgage Against Accident Sickness And Unemployment

Tips For Protecting Your Mortgage Against Accident Sickness And

Tips For Protecting Your Mortgage Against Accident,​ Sickness And Unemployment
When you​ buy a​ home and take on​ a​ mortgage,​ you​ expect to​ be able to​ make the​ payments .​
Times are uncertain though,​ and many unexpected events can occur knock you​ off track.
If you​ fall ill or​ are unable to​ work because of​ an​ injury,​ you​ may be unable to​ make your mortgage payments .​
If you​ are made redundant at​ work,​ you​ could face losing your home because you​ can't keep up with your mortgage repayments .​
That's why many mortgage companies suggest that you​ buy mortgage payment protection insurance .​
It works like any other insurance - you​ pay an​ annual premium,​ and if​ you​ are unable to​ make your home loan payments for any covered reason,​ the​ insurance policy will meet payments (for you​ for up to​ 12 months with most policies).
PPI and MPPI - payment protection insurance and Mortgage Payment Protection Insurance - have come under increasing fire here in​ the​ UK .​
Last year,​ the​ FSA asked the​ Competition Commission to​ look into the​ market for PPI and make recommendations regarding the​ market for mortgage protection and other payment protection insurance .​
The issues have to​ do with the​ outrageously high costs and alleged dodgy sales practices around most payment protection insurance.
According to​ the​ recently released report on​ Emerging Thinking from the​ Competition Commission,​ the​ PPI industry rakes in​ nearly £4bn in​ premiums each year,​ just under 25% of​ it​ in​ MPPI - payment insurance for first charge and second charge mortgages .​
That's £1bn a​ year in​ mortgage insurance taken out - yet according to​ critics of​ the​ industry,​ only 10-20% of​ that is​ ever paid out in​ claims,​ making a​ tidy 80% profit for the​ insurers .​
Furthermore,​ the​ critics continue,​ the​ industry uses deceptive sales methods,​ and the​ policies include clauses that make it​ almost impossible for most people to​ collect.
In light of​ all the​ criticism leveled against the​ PPI industry,​ though,​ is​ mortgage payment insurance a​ wise use of​ your money? in​ some cases,​ you'll end up paying nearly as​ much or​ more for your payment protection cover than you​ do in​ interest payments on​ your mortgage .​
Despite that,​ it's important to​ find a​ way to​ protect your home and the​ loan secured against it .​
If not MPPI,​ what can you​ do to​ insure yourself against losing your home in​ case of​ accident,​ illness or​ unemployment?
- High interest savings account
One suggestion made by many financial experts is​ to​ self-insure by depositing the​ amount you'd pay for mortgage payment insurance in​ a​ high interest savings account to​ be held specifically in​ case you​ can't meet your monthly loan repayments for some reason .​
The added benefit - if​ you​ neer need to​ touch it,​ you'll have the​ additional savings toward your retirement or​ other goals once your mortgage is​ paid off.
- Disability Insurance
Another option for protecting your insurance payment is​ to​ insure yourself against loss of​ income .​
Disability insurance pays you​ a​ percentage of​ your income if​ you​ become disabled and unable to​ work .​
You can use that insurance payment to​ make your mortgage repayments and meet your other bills and accounts .​
In general,​ the​ insurance premiums for disability insurance are lower than for payment protection insurance,​ and it​ doesn't cover you​ in​ case of​ unemployment.
- Buy from an​ independent insurer
If you​ do decide that payment protection insurance is​ right for you,​ shop around to​ get the​ best deals .​
It may be tempting or​ make sense to​ buy your MPPI from your bank or​ mortgage lender,​ but you​ could end up paying twice as​ much for the​ same cover .​
By law,​ your mortgage company may offer MPPI,​ but they may not require you​ to​ carry their insurance as​ a​ condition of​ your loan .​
According to​ the​ latest figures,​ shopping around and buying your MPPI from an​ independent insurer can save you​ tens of​ thousands of​ pounds over the​ life of​ your mortgage.

Tips For Protecting Your Mortgage Against Accident Sickness And

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