Borrowers advised to consider income protection

Current UK economic problems should prompt homeowners to review their insurance, according to protection specialist LifeSearch.

Income protection could help homeowners protect their ability to make repayments on their mortgage and any other loans. However, given the complexity of the product and the market, LifeSearch has compiled 10 tips for those choosing a policy.

First of all, the firm warned homeowners not to confuse income protection with mortgage payment protection (also known as Accident Sickness and Unemployment) insurance. MPPI plans typically pay out for a year and may include certain exclusions. The premiums and conditions of the policy can also be changed at short notice.

LifeSearch also advised those with mortgages to check the amount of cover offered, the benefits you are entitled to from the Government and your employer, as well ensuring premiums are guaranteed. You should also consider alternatives, such as critical illness, according to LifeSearch. This could be more suitable for your specific circumstances.

Matt Morris, policy adviser at LifeSeach, said: "For most of us, the nightmare scenario must be discovering that not only have we been diagnosed with a long-term illness, but the realisation that income is going to dry up in a few weeks as well. Peace of mind is a few pounds a week spent on a good Income Protection policy."

For more information on protecting your ability to make your mortgage repayments, see the June 2008 issue of Your Mortgage, on sale 15 May 2008.