FAQs: Mortgage protection insurance


What is mortgage protection insurance?

Mortgage protection insurance, or payment protection insurance, is a type of insurance policy designed to cover your mortgage repayment in situations where you suffer a sudden loss of income. Mortgage protection insurance allows you to stand a better chance of keeping your home if you suddenly lose your job or become too sick to work. 

Why do I need mortgage protection insurance?

Mortgage protection insurance is not compulsory, but is an optional extra chosen by many mortgage borrowers to cover their payments if they are made redundant or sacked, or if they fall ill. Some mortgage lenders insist that their clients have mortgage protection insurance. 

Will my mortgage protection insurance always pay out?

Mortgage protection insurance covers a considerable liability as it will insure your mortgage repayments for a considerable length of time, which will often stretch to thousands of pounds of insurance cover. As a result, the requirements for a successful claim are strict. Most policies will not pay out if you resign, are made voluntarily redundant or are fired for misconduct. They will also not pay out if a medical condition was known prior to taking the policy, or if a condition becomes known in the first twelve months of cover.

What is the payment protection insurance (PPI) scandal?

In recent years there has been considerable controversy over the mis-selling of payment protection insurance by banks and other financial institutions. In recent months most of the major high street banks have announced huge compensation funds to cover claims for mis-sold mortgage protection insurance. Banks would typically overstate the risk of needing the cover, would lie to encourage customers to take the cover out, or would falsely state the need for the cover, when in fact the client was already protected by other means.

Do I need a solicitor to challenge a mortgage protection insurance matter?

If you have been paying payment protection insurance of any kind, including mortgage protection insurance, then you may be able to receive compensation for mis-selling. You should take legal advice from a specialist solicitor dealing with these claims to understand if you have a case and the level of compensation that may be available if you are successful.
If you would like to obtain legal advice on mortgage protection insurance, Caven can put you in touch with a local solicitor free of charge. So, if you have any questions or would like our help in finding local solicitors please call us on 08001 221 2299 or complete the web-form above.
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