You may lose your home if, for some reason, you do not keep up payments on your mortgage. Therefore it is very important to put certain things in place to protect against unforeseen circumstances such as illness or job loss.
Therefore, a mortgage insurance policy could prove vital in the event of such misfortunes. By doing taking out the relevant policy, you are not only protecting yourself and your family, but also your home. As with all insurance policies, cover may not be available if you have existing or a previous history of health problems.
Below are a few examples of mortgage insurance products:
Mortgage Payment Protection
This type of policy typically covers payments on your mortgage one month after your income stops due to redundancy, an accident or illness. These payments will continue to be paid for one year.
It may be that there is a condition in your mortgage contract for you to take up such a policy with the lender. If not, but you still wish to enter into such an agreement, it is advisable to shop around for the best price.
Mortgage Protection Life Cover
This is a policy that settles your mortgage loan if you die. Some mortgages may include life cover depending on the type.
Critical Illness
A critical illness insurance plan will pay out a lump sum if you are, for some reason, diagnosed with a critical illness (for example cancer). By using this lump sum, you can then pay for both the required medical treatment (if applicable) and the remaining balance on your mortgage.
As with any legal / insurance document, understanding the small print is vital before entering into an agreement. Therefore, you will need to read the terms and conditions very carefully to understand the type of illnesses covered. It is strongly advisable that you ask a member of the insurance company to fully explain these things to you as a slight misjudgement could cost you dearly in the event of a future illness.
Income Protection
An income protection policy replaces a substantial part of your income if you are unable to work for a long period of time due to illness or disability. Payments will continue to be paid until you can return to a certain level of work. This is also the case if you qualify for retirement.
