Mortgage Protection Insurance Cover UK

When you fill in your mortgage application form, mortgage protection cover seems merely to most people as a box that has to be ticked or not. Sometimes, you may have a throwaway conversation with your estate agent about it, or maybe with your lender. However, there is a gap between the amount of mortgage protection cover that is needed and the amount that actually gets taken out. It's reckoned that less than a third of homeowners are protecting their mortgages with either mortgage protection cover or some form of critical illness cover.

For some reason, mortgage protection cover appears to be the sort of product that customers are reluctant to buy. Perhaps its because they typically pay benefits for only 12 months. Maybe its because there is a long list of pre-existing conditions which mortgage protection cover doesn't cover. Perhaps stories about poor claims records are putting people off the product, or it could be just that they are expensive.

The Council of Mortgage Lenders (CML), a government agency, would like there to be a take-up rate for mortgage protection cover of 55% of all borrowers by the end of 2004. One of the reasons why they are so troubled is that a recent Labour Force Survey found an increase in unemployment, and this includes people who are out of work but not claiming benefits. Yet borrowing continues to increase, partly catalysed by cheap mortgage deals and rising house prices, without enough thought for the impact of unemployment or illness.

Perhaps a good reason for the lack of take up of mortgage protection could be considerable confusion amongst potential customers. Some customers get so caught up in the many complications involved with buying property that they start thinking that they have mortgage protection already arranged, when they have actually misunderstood the situation. Some of them think that as life insurance is mandatory, it will be arranged automatically.

Then when lenders do provide cover, they may not offer the right type of product or the cheapest product available. Banks and building societies tend to offer more expensive cover, hence stories of "rip-off" rates for mortgage protection, which has hardly endeared it to the public.

Also, many housebuyers are aware of the need for life insurance when they take out their mortgage. But they may not think about what happens if they don't die, but are left unemployed or ill enough that they stop earning an income. Some life insurance policies offer critical illness policies as an option on them. But this type of insurance tends to cover a narrower range of illnesses and also only if certain treatments are used. If you are buying a house, will you have time to check and compare the benefits? Do your research.

 

 

 

 

 

 

 

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