Mortgage or Income Protection Insurance Help

AVENUE

Do you know if there are any Companies/Policies that pay out Income Protection Insurance/Mortgage Insurance if someone's hours are significantly reduced, but not made unemployed?


Also how do companies assess the situation with regards the risk of becoming unemployed before taking out a policy.


I for example work as a carer for my step son. He was recently paid by a Government fund which paid him money to employ a carer. The Government closed this fund, but have transferred the money to the local authority and the Local Authority are paying the exact same money. This they have promised to do until a reassessment of his needs. They have not said when any reassessment will take place.


I'm worried in case the LA try to cut his support hours how that will leave me. This is of course always a worry with Local authorities cutting budgets.


How would a claim be looked at if I took out Income Protection Insurance but then either had to be made redundant because his budget was cut that low. Or if my hours were significantly reduced?


Thanks Avenue.

MortgageMamma

Hmm its a tricky one this


I know there are income protection policies that will pay someone if they have to unexpectedly become a carer, but I don't know how they would see it as you are employed effectively on behalf of a family member who's care needs are subject to re-evaluation by the local authority, and the funding channel for such care has recently changed. Do you also receive carers allowance? How many hours are you paid for presently?


It is usually the norm for someone to have to work 16 hours or more to qualify for income or mortgage protection.


You need proper advice, speak to a mortgage or financial adviser. We usually have access to many income protection product providers and it would only take a hour or so to check this out with a few protection providers. There may also be other ways to reduce your mortgage costs.


MM

amnblog

The insurer wont pay benefit in a case where the insured party was expecting the circumstance on which a claim is later made.

AVENUE

My Step Son doesn't live with me, his Mother who does live with him gets Carers Allowance for him.


I'm his paid Carer/PA (Personal Assistant) and I work around 60 hours a week doing this, often more.


I don't currently have any Mortgage/Income Protection Insurance, my current mortgage is with Santander and has only 6 years to run & about £20,000 to pay on it.


I am going in to the Halifax tomorrow as one of their Mortgage Advisors (because I bank with them) has said that Halifax are currently offering a £750 cash back deal for just transferring my mortgage over.


I've no real way of knowing if a reassessment of his care by the Local Authority would lead to a cut in my hours or not. Which I guess would be the same for anyone who is a paid carer, so was wondering if I would be able to insure myself for this, and if switching mortgage is a good idea and would affect things in any way?


Thanks Avenue

MortgageMamma

Regarding switching your mortgage, unless you are on a permanent contract be mindful some lenders don't like contractors.


You could possibly insure yourself in terms of your mortgage payments but the devil is in the detail - that one would need talking through with a suitable insurance firm. There are two rules you need to be mindful of. When applying for mortgage protection insurance or unemployment cover you are asked the following questions:


1. If your employer has given you reason to believe your hours may be reduced within the last 6 or 12 months
2. Has your employer announced redundancies within the same time scale.
3. Do you work 16 or more hours
4. Is your contract permanent and no seasonal
5. Is the application for this type of insurance related to a new application for secured lending.


You get the gist of what I am saying, you can only apply for it if you have absolutely no warning of any of the above eventualities. To do so would be considered fraudulent. If you are going to do this you need to do it as you change your mortgage. remember that by going to Halifax directly they can only give you information not advice and as your circumstances are reasonably complex I would suggest you seek proper qualified advice from a whole of market mortgage broker - Halifax may not even be the most suitable lender for you despite the generous cashback offer.


MM

AVENUE

Thanks. I'm on a permanent contract and employed directly by my Step Son, although his funding comes from the Local Authority, its him not them who employ me.


I'm his only Paid Personal Assistant (Employee). He has not said anything about my hours being reduced in the last 6 - 12 months other than saying that the funding he receives to pay me now comes from the Local Authority rather than the Government.


I guess in the current climate anyone who relies on public services & Local Authority care is always worried regarding their job situation, but surely unless the Local Authority has told him to expect less care or funding then neither of us will have any way of knowing until that situation arises. These decisions are usually made after a reassessment and reassessments can happen frequently ie every 12 months, or indeed as in our case not as frequent as that, our last one was about 2 years ago.


Are there policies that will pay out if my hours were just greatly reduced but not actually made redundant do you know?


Also, if I struggled to get this insurance. If the worse came to the worse & I was made redundant, would the fact that I had recently changed to a new mortgage provider mean they would not be as forgiving/understandable as my current provider Santander who I've been with for about 9 years, or will that not have any bearing at all.


Thanks - Avenue