Insurers may withdraw Mortgage Protection Insurance cover to their own employees
In the wake of the credit crunch, collapse of Lehman Bros. , the inevitable threat hanging over the future of American insurance giant AIG, and the unprecedented collapse of UK Insurance giant HBOS shares by 40% in one day, you could argue that MPPI unemployment Insurers are right to worry and already some capital lenders are refusing to offer payment protection insurance to homeowners and employees who work for banks and building societies.
Some Underwriters have gone further becoming more risk averse and have included all financial services sector workers including insurance company employees, IFAS and insurance broker staff.
This adds to the growing list of trades and professions who are now finding it increasingly difficult to purchase unemployment insurance to protect their mortgages, income level or loans.
Construction workers, estate agents, conveyancing solicitors and services and more recently removal firm staff can no longer easily purchase mortgage payment protection insurance or the other products that could ease the pain of being unemployed.
The move could be indicative that the UK Insurance market is heading for recession. Insurance Staff have been made unemployed gradually over the the last six months, with a recent 6000 redundancies at Norwich Union flying under the general radar, with other insurance company giants creating redundancy hit-lists.
A spokesperson for Personal Accident – one of the UK’s largest online independent mortgage protection insurance providers, who compare policies on price and cover – said, “It’s true that we have received notices from some of our underwriters withdrawing certain particular income related unemployment cover for a list of trades within the financial services sector.
However we can still offer age-related policies for income protection insurance and mortgage protection insurance to all bank and building society staff, which generally offer better cover at lower prices as they are not lifestyle rated and available to anyone. As these are monthly policies they are simple to change midstream – you could save yourself a fortune in premiums if you switch your policy from a bank or building society and a lot of worry if you are unfortunate and join the ranks of the mass unemployed, or your building society or bank collapses leaving your policy worthless.
Could you meet your mortgage repayments or pay bills without a job? These are very worrying times….”
Simon Burgess head of independent provider Burgesses agreed. “Age-related unemployment insurance offers the best solution to financial services workers who may be threatened with unemployment. We offer policies to cover your mortgage, wages or debts whilst you are unemployed. I would however advise anyone thinking of protecting themselves from financial harm if they lose their job, to act fast as there is a ninety day exclusion no claims period from the start of the policy.” He added, “Although our mortgage protection insurance has seen a downturn with the number of new mortgages being taken out virtually non-existent due to the credit crunch, we have recently seen a sharp rise in the number of unemployment insurance applications, particularly from workers in financial services.”
So it appears that if you want to be able to pay your mortgage in three months time or still have an income you should take out payment protection insurance cover today. This is particularly prudent for financial services sector workers whose jobs appear to be most at risk.