Mortgage Protection Insurance UK

A mortgage protection cover UK policy can work and can do the job that its supposed to do but it is down to the consumer themselves to ensure that they do everything they possibly can to understand the ins and out of the cover and to realise that it isn’t suitable cover for everyone, as there are exclusions which could stop you from claiming.

A mortgage protection cover UK policy is an invaluable product, despite the bad reputation it has earned for itself during the last few years. However, in all fairness, you should understand that the product itself isn’t to blame but rather those that sell the protection. The majority of problems have stemmed from policies that have been sold alongside loans and mortgages at the time of taking out the mortgage; with the high street lender this has been a lack of information on the part of those selling the product. On the internet one of the biggest problems recently highlighted has been the use of pre ticked boxes which the consumer didn’t realise they had to un tick if they didn’t want the cover. This led to them unwittingly buying a policy that they may not have needed or may have been ineligible to claim on.

After an investigation by the Financial Services Authority (FSA) many online sellers of mortgage protection cover UK policies agreed to change the way they sell the insurance. Investigations in to the protection insurance industry began in 2005 after a Super Complaint by the Citizens Advice to the Office of Fair Trading. Subsequently, many well known financial organisations were fined for their sloppy sales practices and for not having the consumer’s best interests at heart.

A mortgage protection cover UK policy is a type of insurance that is taken out to safeguard against the possibility that you might become out of work after suffering from an accident, an illness or unemployment. Providing your circumstances are in line with the policy then it would pay out a fixed income each month which is tax free after you have been out of work, usually for 30 days or more. It would continue to provide you with this income to ensure that you wouldn’t be struggling to make your monthly mortgage repayments and so wouldn’t have to worry about losing your home due to repossession. The cover would continue to provide you with this income for up to 12 months and some providers give 24 months on their policies.

It is essential that you shop around as mortgage protection cover UK policies do vary greatly in the premiums that are charged as well as the quality of cover offered. Historically, the high street banks and lenders charge way over the odds for the cover with premiums often adding thousands more than they need to onto the total cost of the mortgage. The cheapest premiums can be found by going with a standalone provider. The standalone provider not only offers the cheapest premiums which saves you money but also will provide you with the essential information and key facts of the mortgage protection cover UK policy which ensures that you are able to make an informed decision before buying.

The very product that is supposed to help the consumer in their time of need can be confusing and hard to understand which means that many times an individual ends up buying a product that they cannot possibly hope to claim and which should never have been sold to them in the first place. The simple fact is that mortgage protection insurance, sold incorrectly, confuses some homeowners.

There are many reasons why mortgage protection insurance can be confusing, the first is the high street lender will push the cover alongside the mortgage while at the same time not always giving out vital information regarding what the cover entails and also without making the consumer aware of the total amount they will be paying for their cover over the term of the mortgage. Mortgage protection insurance when bought this way can add thousands onto the cost of the mortgage over its lifetime and could leave the policyholder open to the risk of losing the roof over their head if they should become out of work.

Sold correctly, mortgage protection insurance provides invaluable cover against the fact that you could find yourself without an income if you were to come out of work through having an accident, suffering an illness or through unemployment through no fault of your own.

Providing you have been informed of the exclusions then a mortgage protection insurance policy would pay out after you have been out of work for 30 days or more and would ensure that you had a tax free income each month to pay your mortgage each month. This income would last for 12 months and in some cases up to 24 months, which would be ample time for you to get back on your feet again and back to work while keeping the roof over your head. A policy can be bought to guard against becoming out of work through accident and sickness only; unemployment only; or accident, sickness and unemployment. The cover is sometimes called ASU which is accident, sickness and unemployment cover.

The biggest factor that has led to several well-known financial companies being fined by the Financial Services Authority earlier in 2007 after a super complaint by the Citizens Advice to the Office of Fair Trading, was that the consumer is unaware of the many exclusions. These include being self employed, retired, or only working part time.

Many policies were sold without ensuring that the homeowner was aware of these conditions which meant that they couldn’t hope to claim on them. The Financial Services Authority (FSA) has fined many leading names for failing to ensure that a policy was suitable for the consumer when it came to the terms and conditions. The investigation and review by the Competition Commission is still underway and should reach its conclusion by February 2009 when it is hoped that changes for the consumers best interests will be made, for at the present, for some homeowners, mortgage protection insurance is just too confusing.