Mortgage payment protection insurance continued.
All mortgage payment protection insurance policyholders pay the same flat rate regardless of factors such as age, smoking habits and medical history - although medical conditions which you had before the cover started (so called “pre-existing conditions“) are excluded.
Premiums can cost less than £4 a month per £100 of monthly benefit covered via a competitive provider, and for the average mortgage this is likely to amount to no more than the price of a modest meal out every month.
Banks and building societies, however, can charge a lot more and their cover is often of inferior quality to that sold by specialist providers.
For example, their policies tend not to pay out until after an initial 60 day exclusion period, whereas the specialists usually offer cover that back-dates payments to day one. The lenders, unlike the specialists, also normally restrict the availability of cover to the time of taking out a mortgage or re-mortgage
Nevertheless, even the best mortgage payment protection insurance policies are not necessarily suitable for everyone. The exclusion for pre-existing medical conditions can, for example, make them of questionable value for those who have had illnesses that are likely to recur.
The self-employed should also think long and hard before they take out mortgage payment protection insurance, because it only pays out if they completely cease trading, as opposed to merely experience a lean patch.
Even employed people should realise that the cover only pays out
for unemployment that is involuntary - meaning that those who take
voluntary redundancy will not be able to claim.