Britons with mortgages should insure

The British Chambers of Commerce yesterday warned that Britain is already in a recession and that unemployment rise by 350,000 by next year. Whilst this may not technically be true until statistics confirm two quarters of negative growth, it certainly feels like a recession for many. Mortgage approvals are at an all time low, and with the announcement today that the Treasury is to commit £50 billion to buying shares in the major banks, we face difficult times.

Mortgage Payment Protection Insurance could offer a lifeline to those who fear their job may become a casualty of the current economic climate. However, despite its value it remains one of the most under bought and misunderstood insurances available in the UK. Many people have shied away from buying this protection, having been frightened off by the miss-selling scandals surrounding payment protection insurance, which although it has similarities, is a completely different product altogether.

Mortgage Payment Protection Insurance is also called Accident Sickness and Unemployment cover and is designed to meet the monthly cost of the policyholder’s mortgage and associated costs if they are unable to work. Most policies will pay the first monthly payment thirty days after unemployment, accident or sickness starts, and will continue to pay out each month for up to a year. For many, the lack of effective state benefits means that having a suitable policy could be the difference between losing a home or keeping it.

Whilst mortgage holders are able to buy policies direct from their lender, many lenders are still charge premiums in excess of £5 or £6 per £100 of monthly cover. Whilst this is still good value, there are cheaper options available. For instance, The Mortgage Warehouse GB Ltd has teamed up with payment protection specialist, British Insurance to launch a special offer to all those who wish to arrange such insurance before their job is at risk. The policy being offered is reputed to be one of the best on the market, and was awarded a What Mortgage best buy award in both 2007 and 2008, and frequently tops the Moneyfacts and Defaqto best buy tables. The policy charges just £3.95 per £100 of cover, and for applicants who buy online via The Mortgage Warehouse website at www.mwgb.co.uk the first three months cover is free.

Like most insurance, there are some who do not qualify, and the self employed in particular should read the small print of policies carefully. Those who have started a job very recently may not be covered for the first few months, and those already under notice of redundancy, or in a consultation period are unlikely to be accepted. However for everyone else the message really has to be buy now whilst stocks last.

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