Mortgage Protection Insurance UK

When it comes to almost any type of insurance then policies that come with the cover are filled with technical jargon that only those in the financial sector can understand. When it comes to mortgage payment protection UK policies then this is no exception and is one of the main reasons why the sector has been and still is under investigation and review.

After the Office of Fair Trading (OFT) received a Super Complaint from the Citizens Advice, the Financial Services Authority began an investigation into the sector as well as the OFT. Eventually it was referred to the Competition Commission whose findings are expected in early 2009. Although payment protection insurance policies are the main focus of the Competition Commission review, mortgage payment protection UK policies are also being included, too.

Several well known names in the financial arena have been fined by the Financial Services Authority (FSA), the main reasons that essential facts regarding a policy and the exclusions within it were not always highlighted to the consumer.

Mortgage payment protection UK policies, sold correctly, are invaluable to any homeowner who qualifies for the cover. It is a financial lifeline for those who find themselves out of work after suffering from an accident, a sickness or through unemployment such as redundancy. Providing a policy is suitable for the individual’s circumstances it will provide a monthly tax free income which would ensure that the policyholder will be able to meet their mortgage repayments each month, with the cover paying out for up to 12 months and in some cases 24 months.

A mortgage payment protection UK policy takes up where the State fails when it comes to providing a homeowner with help to keep the roof over their head. The State gives very little financial help when it comes to mortgage repayments should an individual find themselves out of work this way.

However, mortgage payment protection insurance has never been the easiest product to understand even if you are presented with the facts unless they have been clearly explained in plain English. In the past many people who have bought the cover online have purchased the cover without even realising they have done so. This was due to the many proof-hungry lenders using a pre ticked check box which the consumer has to un tick if they didn’t want the cover.

Thankfully due to the investigation by the Financial Services Authority this has now been changed and it is hoped that by the time the Competition Commission’s review and investigation is completed mortgage payment protection in the UK will be explained much more clearly allowing the consumer to fully understand the product they are buying and to know the product is right for their needs.

Mortgage payment protection UK policies could mean the difference between you losing your home and keeping it, but only if the product is suitable for an individual’s circumstances. By shopping around with standalone providers and taking advantage of the information an ethical provider will give, you can ensure that it is right for you before committing yourself. You do have a choice when it comes to buying mortgage payment protection in the UK and you need to exercise that right and use it to your advantage.

If you have purchased or are considering purchasing mortgage protection from a high street lender then think again, for unless you are really careful you could be placing a noose around your neck. Much has been made of how the high street banks and lenders have, in the past, ripped off their unsuspecting customers by selling over priced, often unsuitable cover. However, if you shop around for the cover and take the option of going with a standalone protection specialist then you would probably buy the lifeline a mortgage protection policy should be.

Ideally mortgage protection is taken out to provide those who have to keep up with their mortgage repayments with a monthly income if they should become unable to work after having an accident, an illness or being made redundant. Policies continue to pay out for up to 12 months and in some cases 24 months, which can indeed be a lifeline in protecting the roof over your head and stopping repossession due to not being able to afford your mortgage repayments.

However, as with all insurance, there are exclusions in a mortgage protection policy and this means the product isn’t suitable for everyone. There is a thin line when it comes to determining if mortgage protection is a lifeline or noose and it all basically boils down to the fact of whether you understand a policy or not. The majority of people don’t understand a policy - how could they be expected to when they are filled with what only can be described as technical jargon. Luckily there are lenders in the sector that realise this and campaign for the cover to be explained clearer while doing their bit and giving you the information you need to ensure you don’t hang yourself with an unsuitable policy.

Many high street lenders at the other end of the scale would gladly help you place the noose there and pull it tighter by selling you a policy that is filled with exclusions which of course they haven’t explained to you at the time of selling the policy. They will also charge you an extortionate premium for a policy which could essentially be worthless to you. This has been the number one reason for the fines handed out by the Financial Services Authority (FSA) during their investigation spanning two years and which is still underway while the sector has also been referred to the Competition Commission (CC) by the office of Fair Trading.

In early 2007, several well known financial companies were fined by the Financial Services Authority due to not ensuring mortgage protection was right for consumers. However, with the FSA and the CC looking at the payment protection sector as a whole, positive changes will be made in the industry and cover will be made more transparent for the consumer. Mortgage protection is supposed to be a lifeline, this is what it was designed for and is what it should do and by the time the CC and the FSA have completed their respective review and investigation hopefully mis-selling will be a thing of the past and mortgage protection will have a better future, as will the consumer.