Mortgage repayment policy

[Protocol]

Hello,

I have 2 queries about mortgage repayment policies. I have noticed that some cover the risk of unemployment, others don't, they just cover disability/ill-health.

1. Can you buy them from a normal insurance broker? Or are they sold only by the mortage provider?

2. Can you change the policy during the life of the mortage, i.e. switch to a different provider? Say, 1 or 2 months into the mortgage?

Thanks.

 

[LDFerguson]

You can buy Income Protection from most life assurance brokers. This covers your income in the event of sickness / accident only. As it's not directly connected to your mortgage you can change the policy / cancel it / take it out whenever you want.

Mortgage Repayment Protection (MRP) which covers sickness / accident and redundancy can usually only be bought from your lender, and usually only at the time you're taking out the mortgage. There may be some mortgage brokers who have MRP available on different terms, but I'm not sure.

Don't forget the two big differences between the two - (1) a claim on a typical MRP policy is limited to a maximum of one year; a claim on an Income Protection policy lasts until you are able to return to work, or your specified retirement age. (2) Income Protection premiums are allowable in full for tax relief at your highest rate; MRP premiums are not.

Liam D Ferguson
www.ferga.com