The Government's mortgage holiday scheme to rescue struggling homeowners is a great helping hand but should not be seen as a replacement for insurance, warns James Harrison of insurancewide.com.
"Homeowners should be completely clear that the scheme will only cover interest payments and not the actual repayment of the mortgage itself. People with repayment mortgages and no income protection insurance are still highly vulnerable in the event of unemployment. The Government scheme will be a great relief to many but not everyone will qualify for it and those who do should be aware that it's not the answer to everything and should check exactly what it covers them for. Those with savings of over £16,000 or with buy-to-let mortgages will not qualify at all. For these people, and even for those who do qualify for Government help, a payment protection insurance policy would be an extremely valuable investment. At the right price, payment protection insurance could be a real saviour, especially now when people's employment futures are so uncertain. It is designed to provide a monthly income to meet all bills, including mortgage capital and interest repayments."
Income protection insurance: News update: December 2008