Mortgage Protection Insurance: Don’t Be Mis-sold!

When you take out your mortgage, your mortgage lender will often try to sell you a mortgage protection insurance policy. The lender gets a good commission on it, so might well put some pressure on you. But don’t be bullied. You don’t have to get it from them, and you don’t HAVE to have it at all. In fact for some people mortgage protection insurance is unnecessary and a waste of money.

So why might you NOT need mortgage protection insurance?
• If you are in a secure job or a job with a “no redundancy” agreement. This may apply to you for instance if you are employed by a local authority. These agreements are usually made with the Union, so check with your union representative or your human resources department.
• If you will qualify for a healthy redundancy payment if redundancy does happen. If you have been for many years in the job, your payment may well more than cover your 12 months’ mortgage repayments.
• If your employers have a good sick pay policy in place. Some employers pay full salary for 12 months, others pay full salary for six months and half for the next six months.
• If you are self-employed. Many mortgage protection insurance policies actually exclude you if you are self-employed, yet some lenders might still try to sell you such a policy! Those which do include the self-employed will only pay out if you have actually gone out of business and can prove it – not if you are just experiencing a thin time. You are probably better to look for an independent protection policy.
• If your employment is casual or seasonal.
• If you have permanent health insurance.

So make sure you are not misled and not bullied! You are probably better saying “No” to your mortgage lender and seeking out a broker or financial adviser to find out if mortgage protection insurance is really appropriate for you.