Paramount Group - Mortgage Payment Protection

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Protecting Tax Free cash

As you generally advise your clients regarding remuneration strategy and more importantly profits extraction it appears, following research with our existing clients that, for those who hold executive/directors pension policies and even those with small self administered schemes, it is now worth a review. This would examine whether it would be advantageous to transfer the existing benefits to a section 32 or section 32A (Block transfer) and start funding a self invested personal pension. For those who have small self administered schemes it is still possible to transfer to a section 32 and have the section 32 self invested, utilising the commercial property occupied by the sponsoring employers company.

Mortgage Payment Protection

Set up specifically to cover mortgage payments and related costs, this type of policy offers short term benefits and should therefore be considered as an additional part of a persons financial planning rather than as a replacement for any of the above.

The benefit can be set up to cover periods of unemployment following redundancy or time off work through accident or sickness. Benefits will usually be limited to the monthly mortgage payment, related costs such as building and contents insurance and life insurance premiums. Generally speaking Mortgage Payment Protection will cover the mortgage payment plus an addition (set percentage) for household bills, not mortgage payments and an additional 25%. If required, the total benefit can be set for each member of a couple or split according to the % of overall household income earned by the individual.

On receipt of an acceptable claim, benefits will typically be paid for a period of 12 months although some may be longer. In the case of accident and sickness, therefore, this type of benefit is not as comprehensive as Income Protection (PHI) although it can be set up as individual or joint components. Mortgage Payment Protection can therefore be set up to cover unemployment only and run alongside a more comprehensive income protection policy.