Many people think mortgage protection cover is too expensive and therefore do not bother with it at all.
Bank staff always try to “sell” mortgage cover and sometimes are successful even if it means people just take the life insurance part of the plan. Mortgage brokers tend to be a little better at explaining the benefits and therefore might provide a more comprehensive type of cover, but still most people will go without.
Is Mortgage Protection Cover Expensive?
In short – it can be expensive!
But insurance cover of any kind is based on the cost of the claims, so an expensive insurance is only expensive because there are a high number of claims or because the claims are for a high dollar value. Either way, mortgage protection insurance is more expensive than most insurances because the insurance companies pay out more in claims.
You could therefore say that it is one type of insurance that is used to protect people.
It Doesn’t Need To Be Quite As Expensive
Like many insurances, you need to establish what the risks are and if you can afford to accept some of the risks yourself.
With mortgage repayment cover it may be that you could survive for ‘say’ 3-months without income before you start having serious money issues. You might be able to apply for a mortgage holiday for up to 3-months or use savings, but by increasing your waiting period (excess) on a repayment cover from the standard 4-weeks used by most banks to 13-weeks you can reduce your premiums significantly.
You can also look at the term that the cover would pay out for.
By limiting the benefit period to ‘say’ 5-years instead of the standard ‘to age 65′ you can reduce the premiums. To be prudent you may wish to add some permanent disablement cover to your policy, but even with this included the premiums are generally lowered.
We had to add this picture – this ‘health tip’ goes to show that you can save money, but often the outcomes may not be what you want.
It is easy to trim costs or go for the cheap option with anything; however with insurance you do need to be extra careful as often a ‘cheap’ option will not provide what you expected.
If you are comparing policies you need to ensure that you compare apples with apples and generally this is something that better insurance advisers do, whereas banks generally only offer one option – no choice.
Seek Advice Of An Expert
There are some very good insurance advisers and mortgage brokers that can provide advice on the various mortgage protection cover options. Make sure that they explain the key policy differences and why prices are different.
This is one area where you can still get expert advice for free.
Make sure that anyone you speak to is able to offer comparisons as there are still people that call themselves advisers but whom are really just salespeople who will “sell” you anything so they get a bigger commission and incentives.
If mortgage protection cover is too expensive review it today.