Mortgage payment protection and the government

  
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It is harsh reality that one may become sick or have an accident or become unemployed.

Will the government bail us out in these recessionary times?

In October 1995, the government changed the rules with assistance of mortgage interest payments for those seeking job seekers allowances when they lost their jobs and become unemployed.

This involves:

·         Those with mortgages before 1^st October 1995 have to wait 8 weeks before there is any government assistance (between 8 to 18 weeks there is 50% allowance for interest payments).

·         The period below eight weeks has no government help at all.

·         Up to the next 18 weeks you can claim half the interest claimed.

·         After 18 weeks there is 100% allowance given for mortgage interest payments.

Those home owners who have taken a mortgage after 2^nd October 1995 obtain marginal assistance and may have wait 39 weeks before the government can help and in the meantime the home owner may have no protection whatsoever.

The government’s intention was that by withdrawing some of the state help that home owners may seek private mortgage protection insurance. However, the reality has been that home owners have not done this and the take up for mortgage payment protection insurance has been quite low.

The key points about mortgage payment protection insurance are:

·         It has various deferment periods or excess periods of 30/60/90 days.

·         The maximum cover lasts for 12 or 24 months depending on the terms of the policy.

·         It can cover the self employed under certain conditions (such as there is evidence of ceasing trading and the Inland Revenue have been informed).

·         Covers those classified as contract workers, if they have a contract greater then 12 months or are working at the same company for at least two years.

In most cases mortgage payment protection may not cover for:

·         Mental illness.

·         Pre-existing medical conditions.

·         Pregnancy.

·         War involvement.

·         Alcoholism.

Home owners are reminded that it is imperative that they always read the full conditions and terms before entering into an insurance contract.

Any changes to the mortgage payment protection policy requires at least six months for the notification to take effect. Therefore, it is vital that all known facts are declared at the start of the policy.

The home owner can also investigate other solutions which can be combined with mortgage protection insurance, for example:

·         Income protection insurance, which can cover up to half of your wages or salary up to the point that you can return to work or become eligible for retirement.

·         Critical illness insurance may also be considered by Insurance Purchasers as it covers for the longer term and provides the greatest amount of protection.

Mortgage payment protection insurance should be considered for the short term until you are back at work but the services of an Independent Financial Advisor is useful who may carefully compare the terms and premiums which may be of the greatest benefit for that rainy day and protecting your family.

Article reference 031.

Note

The opinions expressed in this article are those of the individual writers and are not representative of Insurur.co.uk.