Mortgage Protection and how to get JSA

[Efbe]

Ok guys, i'm not all that great with finance, so please stop me and point out anything glaringly obvious I have done wrong!

My mrs has been getting quite worried about our lack of Mortgage Protection (MPPI) If I become long term ill, or unemployed.
I am the sole earner in our house, for me and the mrs and three kids.

In terms of unemployment, I have read that Job-Seekers Allowance(JSA) does not get paid if your mortgage protection is going straight into your bank account rather than directly to the lender.
Given that JSA would be more than our mortgage repayments, it doesn't seem to make any sense to take out MPPI in this case.

Now I had also heard that some Insurers would pay the MPPI directly to your lender:> Firstly I can't find any insurers that do this (have checked about 8 of them now), and secondly I'm not all that convinced that you would still get JSA is they found out about this, whch I presume you would have to declare.

Am I correct in my thinking?
Do any insurers pay MPPI directly to your lender?

[Eric Mc]

Speak to Lloyds TSB - they will sell mortage protection to just about anybody - whether you need it or not.

(PS - I am only joking, Lloyds have just posted up a loss of £3 BILLION because they sold this type of product inappropriately).

[moosed]

May be worthwhile checking your home insurance policy as many of these carry MPPI as an additional payment.

[Efbe]

cheers guys

thing is though, potentially if I did take out mortgage protection it could stop me from getting JSA in the event of me losing my job.

does anyone know of an insurer that would pay the mppi directly to the lender, rather than to my bank account?

[moosed]

Have you checked with your mortgage provider? I am with the Halifax and have MPPI with them and they have said that they would not pay the money direct to me.

[scotal]

I dont know of any insurer who will pay directly to the lender. They all pay to the policy holder.
You have to be claiming JSA (and prove it) for the MPPI to kick in. I guess they would take it into account when assessing your JSA, but you buy the insurance to cover the mortgage payments and associated bills, so it's not going to make you any "better off"

You do know MPPI is limited to either 12 or 24 month's payout? Good for short unemployemnt or illness, not so great if its really debilitating.


ETA, be very careful which provider you go with, some MPPI policies are much better at not paying than they are at paying out.

Edited by scotal on Thursday 4th August 15:22

[Efbe]

cheers moosed, same as me. i'm having a meeting with them tuesday, so wanted to work out my situation before speaking to them


also yeah i'm aware it's not great for any amount of time.

I also know it won't make me any better off, but given my current mortgage payments are actually less than we would get JSA, if there is any chance of not getting JSA due to the MPPI payments, then it is just not worth it for me

[Extra 300 Driver]

I was out of work for 6 months and claimed on our mortgage protection policy, and claimed JSA. I had to get a form from the job centre signed every month, I cent remember but it’s a standard for and a standard process. The JSA and mortgage policy payments went in to the same account and we kept paying the mortgage, no problems at all.

I hope that answers your question?

[Efbe]

Extra 300 Driver said:

I was out of work for 6 months and claimed on our mortgage protection policy, and claimed JSA. I had to get a form from the job centre signed every month, I cent remember but it’s a standard for and a standard process. The JSA and mortgage policy payments went in to the same account and we kept paying the mortgage, no problems at all.

I hope that answers your question?

excellent cheers

was it just the 6 months you were off for? don't they means test after this, I wonder if that would affect it?

[cuprabob]

IIRC it depends on which version of JSA you are on. If you are on Contribution based JSA then you are entitled to 6 months JSA and your Mortgage PPI has no impact but to claim you need the form (ABI 1) from Jobcentre every month to confirm you are looking for work.

After 6 months or if you have not paid enough NI you go onto Income based JSA which is means tested and your PPI will be taken into account

[Efbe]

Thanks bud

Will have to read up on JSA methinks, have been working full-time for 7 years though so would have thought I was entitled to most things

[cuprabob]

Efbe said:

Thanks bud

Will have to read up on JSA methinks, have been working full-time for 7 years though so would have thought I was entitled to most things

Should be, but believe it or not it doesn't matter how many years you have worked it's just the last 2 years that count.

What you will soon learn is that the system is totally against those who have worked all their lives.