If you’re unable to work due to sickness, a disability or if you lose your job, mortgage payment protection insurance will cover the cost of your mortgage payments. Without it, you’ll still need to make your monthly mortgage repayments or risk losing your home.
There are two ways that you can protect your mortgage repayments if the worst happened. You can make a claim on your mortgage protection payment insurance policy or use the payments you’ll receive on a general income protection insurance plan to meet the cost of your mortgage repayments.
In essence, there are three different types of mortgage protection payment insurance and costs will vary according to the product you choose. In order of insurance premiums, starting with the least expensive, these are the different types of mortgage protection payment insurance:
- A basic ‘unemployment only’ policy will only cover you if you’re made redundant.
- An ‘accident and sickness only’ policy will only cover you if you have a long-term illness or suffer a serious injury.
- An ‘accident, sickness and unemployment’ policy is a belt-and-braces plan that will cover you if you’re made redundant have a long-term illness or suffer a serious injury.
When you make a claim on your mortgage protection payment insurance policy, your provider will pay you a fixed sum each month, usually for up to two years from the date you became unable to work or lost your job. You will usually have the option to base what you could be paid out on your salary – this is typically up to half your monthly wage. Other options include covering the cost of your mortgage repayments alone or extend it to cover the cost of your living expenses and/or regular bills too. This is usually up to 125% of the cost of your mortgage.
Bear in mind that if your illness prevents you from returning to work for more than two years, mortgage protection payment insurance may not provide you with the cover you need. In this case, consider taking out an income protection insurance policy.
If you’d like to know more about mortgage protection payment insurance, talk to our team of independent insurance protection advisers who have access to a great range of insurance products to suit your personal circumstances. Call us on 08454 500200 or click here to make an enquiry.