Mortgage Protection Insurance Broker
Mortgage Protection Insurance Broker Southampton
Many standard mortgages do not have any mortgage protection insurance included, so it’s important to decide what kind of separate coverage you will need.
There are several different types of mortgage protection, and hundreds of different products from UK insurance providers – so it can be very confusing!
Searching through over 5,000 products all with different exclusions and benefits, our brokers will find the very best deal for you.
What is mortgage protection insurance?
What are the different types of mortgage protection insurance?
1. Life Insurance
Mortgage Life insurance pays out to someone such as a friend or family member. It gives them financial security if you are no longer around to support them. There are two main types of life insurance policy. ‘Term life insurance’, which protects you for a set amount of years. And ‘whole of life insurance’, that lasts until you die.
Term life insurance can come as level and decreasing. Decreasing term insurance is best suited to a repayment mortgage. This is because the level of cover will fall as the mortgage balance does.
Whole life insurance will cost a lot more, as there’s a guaranteed payout at the time of death. These products have nothing to do with ‘mortgage payment protection insurance’. This was often mis-sold with mortgages before the financial crisis.
2. Income Protection
With income protection the insurer covers some or all your regular income if you are too ill to work.
This works well with a home loan as it covers the cost of your mortgage payments and it is very popular with self employed people because if they were unable to work due to illness they do not receive any sick pay. Income protection is designed to pay you a monthly income for each month you are signed off work through sickness or injury until you are able to return to work or if you were to pass away.
3. Critical Illness Cover
Critical illness cover also pays if you fall very ill. Unlike income protection, you pay in a lump sum. The cost is set when you take out the policy.
Like life insurance, critical illness cover is designed to give you peace of mind that if you were to be diagnosed with a serious illness for example cancer, heart attack, stroke (to name a few), that you and your family do not suffer any financial difficulty. Meaning the only thing you have to worry about is getting better.
Do I need mortgage protection insurance?
Buildings insurance is the only insurance that lenders need you to have.
But people who work with mortgages feel that more people should protect themselves. It’s best to bring up your protection needs. Our mortgage advisers will ask you if you’ve thought about insurance when you get a mortgage.
If something goes wrong and the broker is accused of not mentioning it, they may ask you to sign a disclosure. This is to say that you did not want mortgage protection insurance when the lender or broker offered it.
Nobody wants to think about falling ill or dying. So it’s harder to talk about protection than getting finance to buy your own home.
Where can I get mortgage protection insurance?
At Alexander Southwell Mortgage Services if you want mortgage protection insurance it’s best to speak to our specialist brokers.
Advisers are best placed to compare the deals on the market. They’ll also find what type of mortgage protection insurance you need and make sure it’d pay out if needed and fully cover your mortgage.
Mortgage protection is a critical part our process, we will first discuss your budget and then go through what type of protection you would like. That might be if you are unable to work, to cover your mortgage payments, if you lose your job or just an amount of cover to pay you a lump sum.
Alexander Southwell Mortgage Protection Insurance
How much is mortgage protection insurance?
This is really an impossible question to answer until discussing your full details. The premiums on mortgage protection insurance depend on many things.
Life Insurance can range from very small premiums to much larger, it all depends of the type of life insurance you choose to take, the amount of cover that pays out a lump sum and your answer to the insurance companies health questionnaire.
Income protection can be as little as £10 a month, though most people pay more than £50 a month.
How much you pay depends on:
- how much income you are covering
- how long the policy runs for. It can run for a ‘term’ of a few years or be a ‘whole of life’ policy
- the deferral period. This is how long you can wait before the insurance starts paying after you’re not working
- indexation. This is if the money you get goes up with inflation
- how long the policy will pay out for after claiming (with income protection)
If the cost of your policy stays the same over time, it’s known as ‘guaranteed premiums’.
You can also take out policies where the amount you pay changes over time.
Or have ‘reviewable premiums’, where the insurer can change its terms.
There are also policies that cost more as you get older, called ‘age banded premiums’.
Health & Lifestyle - Mortgage Protection
In theory, the younger and healthier you are the cheaper the policy will be. This is because it is likely you will not make a claim for a long time. Smoking makes policies much more expensive due to its impact on your health. If you stop smoking for a year it could halve the cost of an income protection policy. The older you are the more premiums will cost. If you have pre-existing health problems the policy may be more expensive. Or it might exclude those conditions or have a set exclusion period.
Your job is also taken into account if it puts you at a higher risk. For example, if you work with heavy machinery it may be higher than if you work in an office as this is a higher risk.
Alternative Mortgage Protection Insurance options
If you lose your job or are unable to work through accident or sickness, mortgage payment protection insurance will cover the cost of your mortgage repayments each month. This is usually for 12 months or whenever you can return to work – whichever happens first.
You can apply for MPPI if you are employed, self-employed or a contract worker – although always watch out for exclusions. You can choose how much you want your policy to pay out every month – you may decide to build in a buffer over and above your mortgage repayments to cover bills and other expenses. However, providers usually set monthly upper limits of between £1,500 and £2,000.
Accident, sickness and unemployment insurance (ASU) pays out if you lose your job or become unable to work through illness, injury or redundancy. It’s normally referred to as short term income protection insurance or payment protection insurance, as payouts are restricted so you can only claim for a maximum of 12 to 24 months.
Cover levels are based on your mortgage and monthly outgoings, and while you get to choose the amount, payouts will usually be limited to 60-65% of your income.
You’ll pay a monthly premium for the cover, which rolls over month by month until you cancel the policy or make a claim. This makes ASU insurance relatively informal and much easier than income protection to take out, accident and Sickness cover insurers are also not as strict with the pre existing medical conditions questions also.