Is Mortgage Insurance Worth It?

Is Mortgage Protection Insurance a Requirement for a Mortgage?

Mortgage Protection Insurance is not compulsory. Sometimes you may be made to feel like it’s mandatory to get Mortgage Insurance when you take out a new mortgage but it’s not the case.

However, the reality is that many people prefer to have Mortgage Insurance to protect their home and their loved ones against any misfortunes life might throw their way.

So while Mortgage Protection isn’t technically a requirement, you might want to consider:

• If you were out of work, could you keep up with your mortgage repayments?
• Do you have enough in savings to continue meeting your mortgage payments and keep a roof over your head while you recover and / or find a new job?
• Alternatively, if the worst happened and you passed away? Could your loved ones feasibly afford mortgage repayments?
• Or would your family be saddled with a large, possibly un-payable, mortgage debt?

If you can’t say for certain how you’ll manage in these situations, then it may be that you need to look at insuring your mortgage.

It’s often one of the easiest ways to reduce the risk of your home being repossessed if you were to suffer an accident, sickness, become unemployed or pass away.

Michael Barrow
Independent Protection Expert at Drewberry

Is Mortgage Payment Protection Insurance Worth It?

Mortgage PPI protects your mortgage against the risk of illness or injury (and possibly unemployment depending on you and your policy).

No one needs to be reminded that a mortgage is a major, long-term financial commitment with a lot at risk if you can’t make your monthly repayments because you can’t work. You and your family could lose your home at a time when you’re already vulnerable.

What’s the Risk of Losing My Income?

• There were more than 4 million A&E visits in England alone in the year to March 2018 classed as ‘other accident’
• Over this period, more than 900,000 people visited A&E with a dislocation / fracture / joint injury / amputation
• Of the 71,062 employees in Great Britain injured on the job in 2017/18 according to the Health & Safety Executive, 52,693 had injuries requiring more than seven days off work
• Half of everyone alive today born after 1960 will be diagnosed with cancer at some point in their life according to Cancer Research UK
• Heart attacks result in roughly one hospital admission every three minutes according to the British Heart Foundation
• 104,000 UK workers were made redundant in 2017.

Is MPPI the Best Mortgage Insurance Option?

Whether or not Mortgage PPI is the best Mortgage Insurance for you will depend entirely on your circumstances. However, it’s worth noting that Mortgage Payment Protection Insurance is not your only Mortgage Insurance option that will cover your mortgage repayments if you’re out of work due to accident or sickness.

Is Mortgage Life Insurance Worth It?

With Mortgage Life Insurance, you receive a lump sum designed to repay your mortgage if you die before you can pay off the loan.

Many people concerned about their loved ones’ finances in the event of their death take out Life Insurance to ensure their families can continue living in their home.

Mortgage Life Insurance is split into:

• Level Term Mortgage Life Insurance
  The amount of cover stay fixed over time and is therefore often seen as well-suited for interest-only loans where the capital balance stays fixed over time
• Decreasing Term Mortgage Life Insurance
  The benefit fall over time, thus making it better for covering capital/principal repayment mortgages because the benefit falls alongside the outstanding capital of the loan.

For those with dependent partners and children, Life Insurance can offer the peace of mind that comes with knowing they won’t struggle financially with housing costs should you sadly no longer be around.

What is the Risk of Dying During Your Mortgage?

• Youth is not a guarantee of safety – more than 1 in 10 (10.9%) of the 607,172 deaths registered in the UK in 2017 were among people aged 20-60
• More than 1 in 5 deaths from cancer in 2014-16 were among people aged 20-64 according to Cancer Research UK
• 435 people die from cardiovascular disease every day in the UK according to the British Heart Foundation
• A further 190 are killed by heart attacks

Will Mortgage Life Insurance Pay Out?

Life Insurance has one of the highest pay out rates of all types of insurance. All of the UK’s leading insurers had a pay out rate above 95% in 2016.

The top two providers by payout rate had a successful claims rate of 99% or above.

The Association of British Insurers (ABI) publishes an average of the payout rate statistics from across all insurers annually. Its 2017 figures reveal that 98% of all Term Life Insurance claims were paid, which were worth £2.79 billion in total.

Often, for the fraction of claims that are not paid out, the reason is due to a lack of disclosure when the policyholder took out the policy (e.g. not mentioning a pre-existing condition). Outright fraud, such as faking death to claim a payment, also shows up in some of the denied claims data.

Need Help? Get Expert Mortgage Insurance Advice

We are here to walk you through your options and discuss if Mortgage Insurance cover is right for your needs and circumstances.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

• There is no fee for our service
• We are independent and impartial
  Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
• We’ve got bargaining power on our side
  This allows us to negotiate better premiums for you than you going direct yourself.
• You’ll speak to a dedicated expert from start to finish
  You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
• Benefit from our 5-star service
  We pride ourselves on providing a 5-star service, as can be seen from our 3900 and growing independent client reviews rating us at 4.92 / 5.
• Gain the protection of regulated advice
  You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
• Claims support when you need it the most
  You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.

If you want to discuss your mortgage insurance options with an independent expert, the team here at Drewberry is waiting for your call. We’ve helped many clients over the years and would be more than happy to offer the same service to you. All you need to do is give us a ring on 02084327333.

Tom Conner
Director at Drewberry