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The customers need for cover
- Joint cover (more than one insured)
The customers need for cover
Those borrowing money will want to complete the loan/mortgage repayments however time and circumstances do not stand still. What may have appeared a comfortable repayment schedule at the beginning of the credit arrangement may have changed due to loss of income through accident, illness or unemployment. Events may occur that make it difficult to continue the necessary payments.
Clearly anything that can reduce someone’s income must be a consideration when it comes to repaying a loan. This does not mean that the customer would have considered this at the time of taking the loan out, and the person arranging the credit arrangement may not have brought the matter to the customer’s attention.
There are reasons why perhaps, the customer may not be concerned about mortgage payment protection insurance.
- They may believe that they have sufficient funds to carry on paying over a period of time to see them through troubled times.
- They may believe that the state will come to their rescue.
- Their employer may offer benefits that provide continued payment of salary over say a six month period.
- They may already have other insurance arrangements that provide them with some or all the protection they need.
These views are considered in more detail below.
Savings
If saving were sufficient then they could be used to make loan/mortgage repayments over a limit period of time. The customer would need to consider if this was what they wanted to do. Savings can be hard and slow to come by and may be intended for other purposes. The customer will already have selected to borrow money rather than use up their savings and this might imply that they wish to keep their saving separate from the credit arrangement.
State help
State benefits over and above basic unemployment benefit usually depend on personal circumstances. For instance it is often not possible for a customer to claim income support if,
- They live with a partner who works more than 24 hours a week,
- They have more than £8,000 savings, including redundancy pay.
Sick pay from the employer
Many employers will offer sick pay as part of the pay/benefits package. Such arrangements are usually only over a set time limit. They often exclude overtime, shift allowances and bonuses.
Other insurance
There are other insurances that cover death, accident and sickness, but not usually unemployment. These other polices may not match those of mortgage insurance and might be there to protect other equally needed exposures and risk.