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How Much You Are Paying For Your Mortgage Protection Insurance Premium

Author : Shane Kruger

If you have bought your mortgage protection from a high street lender or bank, then the chances are that you are paying far too much for your mortgage protection. The good news is that you may be able to cancel your policy, and go to a standalone provider for your insurance.

The role of mortgage protection insurance is to pay your mortgage if you are unable. The reasons for the inability to pay must meet the requirements of the policy in order for the payments to be made on your behalf. Most policies will kick in and make payments for you if you are unable to work due to disability, loss of your job/source of income or death. Some policies will further detail specific covered reasons for losing your job. For instance, if you simply quit your job, you may not be covered. Also, if you die, mortgage protection policies will usually pay off the loan in its entirety.

Mortgage protection is big business and the high street banks and lenders know this and often craftily attach mortgage payment protection alongside your mortgage. Some would have you believe that the cover is necessary in order for you to be successful in getting the mortgage. However, it is currently not compulsory and you can choose to buy it independently. A standalone provider is more often than not the best way to get your mortgage protection. They offer some of the cheapest policies, quality products and a reputable provider should give great advice which ensures you don't get ripped-off.

A mortgage payment protection policy is taken out in case you should find yourself unable to work due to an accident, an illness or redundancy and will pay out for a pre-determined length of time, which is usually for up to 12 months though in some cases it will run for 24 months. Providing you have been out of work for around 30 days (or 90 days with some lesser quality policies) then the cover will ensure that you have enough money to pay the monthly mortgage repayments, which means you won't lose the roof over your head.

One of the biggest benefits besides the lower premium rates that the standalone provider charges is the fact that a standalone provider knows their business. When it comes to loans and getting the cheapest rates then the high street lender is the place to go. However for the insurance to cover the mortgage then it has to be a standalone provider.

So when you go to the bank for your mortgage by all means get the cheapest deal from them, but do your homework and insist that you will take care of the mortgage insurance cover yourself and go independently. If you don't, then you could be paying too much for your mortgage protection.

One thing to keep in mind is that you make the same payment each month for mortgage protection insurance, while the payout amount, if needed, decreases each month. This is because with each mortgage payment you make, you lower the balance of the loan. So, you must make a determination at which point the possible payout is no longer worth the premiums. At this point you can consider canceling the policy or possibly turning it into a term or permanent life insurance policy. Some companies offer this transference as an optional benefit to mortgage protection insurance.

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Tags:   Mortgage Protection, Insurance

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Submitted : 2011-07-11    Word Count : 584    Times Viewed: 162