Mortgage Protection Issue

Maxxed

For the second time now I have had mortgage protection which has almost double over night and I am getting extremely upset with Insurance Companies. They are quite happy to take your money month in month out when there is no risk, but as soon as the protection becomes more important then WHAM, your premiums go up.
Having looked more into the detail I have now realised that it does not pay out till after any lue of notice and then two months after that. This effectively means if I was made redundant (as I would get 6 mths notice) I would not receive mortgage support for 8 months and to be honest if I didn't have work by that time I would be worried about more than my mortgage protection. I am now wondering whether the £50 per month is worthwhile.

Anyone got any points of advice on this ?

dacouch

Insurance companies charge a price that reflects the risk eg what the chances of them paying out for unemployment.

We have had 12 years of growth so the premiums have been low, obviously we are now in a time where the chance of being made unemployed is greatly reduced. If they charged a price so they did not have to increase the premiums in a recession every one would pay a loaded premium in the good years. You would quite rightly then complain that your premium was higher than it should be. So they charge a rate that reflects the chances of them paying out hence it goes up in a recession.

You can shop around but bear in mind some companies will exclude claims for the first few months you have transferred although some will waive this as you already have cover. So if you shop around read the small print as there can be a lot in these policies and bear in mind the "Cheaper" policies are likely to increase their premiums later or even pull out of the market all together (This is already happening).

Payment Shield are a good company for this and will be in in for the long run, they have recently increased their premiums (There are lots of threads on this forum already about this) so are less likely to have large increases later.

dunstonh

For the second time now I have had mortgage protection which has almost double over night and I am getting extremely upset with Insurance Companies.

Why are you getting upset with it when it was always likely to happen?

They are quite happy to take your money month in month out when there is no risk, but as soon as the protection becomes more important then WHAM, your premiums go up.

Insurance companies price risk. During the good days they signficantly lowered the cost of PPI/MPPI. During the bad days they increase it as the risk goes up.

Having looked more into the detail I have now realised that it does not pay out till after any lue of notice and then two months after that. This effectively means if I was made redundant (as I would get 6 mths notice) I would not receive mortgage support for 8 months and to be honest if I didn't have work by that time I would be worried about more than my mortgage protection. I am now wondering whether the £50 per month is worthwhile.

Payments in lieu of notice are wages. You are paying to insure loss of wages. If you dont need it then change it to one that fits your needs.