Insurance Protection

Owning a property and taking out a mortgage is a huge financial commitment. There are several insurances which can help to protect you, your dependants and your property. When you take out a mortgage, the lender will typically offer you their own insurance policies. Although this can be the easiest way to buy cover, your mortgage lender cannot always offer you the best deal.

The main type of insurance is Mortgage Payment Protection Insurance (MPPI). In most cases this is an optional insurance that helps you if you cannot make your mortgage repayments due to redundancy, or an accident or illness that prevents you from working. In order to take out a mortgage some lenders insist that you take out this type of insurance, but you are under no obligation to opt for their own policy. For more information see MPPI.

There are several other insurances you can opt for: decreasing term life insurance is frequently purchased to protect family and loved ones if you die before you have finished repaying your mortgage. It can provide your family, partner, or another person financially dependent on you, with a lump-sum or smaller, regular sums to help cover outstanding mortgage payments. For more information see Life Insurance.

Further insurances are available, which protect your home and personal belongings, including buildings and contents insurance. These insurances are often sold within one home insurance policy, covering you in the event of damage to, or loss of, your home or its contents. Most mortgage lenders insist that you take out at least the buildings component, since their security for the mortgage is your home: if your property is destroyed, they lose their security. For more information see Home Insurance.