Mortgage insurance

Monday, 07 February 2011 10:48

There are a series of insurance products that go with mortgages.

Lenders generally require buildings insurance to be in place for anyone taking out a mortgage, and mortgage brokers will also advise borrowers look at life insurance, critical illness cover, and even mortgage payment protection insurance.

Mortgage payment protection insurance covers monthly mortgage payments for a set period if the borrower becomes unemployed or prevented from working because of sickness or disability.

However, mortgage payment protection insurance is expensive, and many people advise borrowers to take out a standalone illness or income protection plan from a separate provider.

Additionally, mortgage payment protection insurance can be quite limited in what it pays out on.

Critical illness and life insurance policies are often more effective if people are prevented from paying mortgages for extended period.

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