With redundancies a very real threat to us all in the current economic downturn, knowing that you would still be able to meet your mortgage repayments in the event of being made involuntarily unemployed or even unable to work due to accident or illness, would give great peace of mind. And you can get that peace of mind by taking out a mortgage payment protection insurance policy.
Also known as MPPI for short; mortgage cover; accident sickness and unemployment insurance; or mortgage payment insurance among many others, this invaluable insurance does what it says on the tin. Mortgage insurance protects your mortgage payments by providing you with a monthly cash sum that is tax free, in the event of you becoming unemployed or incapacitated.
How much cover will I get?
Mortgage payment protection insurance policy features and benefits differ among the various providers but you can expect to typically receive up to 75% of your gross income or £3,000, whichever is the lower amount. In most cases this should be enough to help meet your monthly home loan commitments as well as any associated costs (which are also covered) such as life and critical illness insurance; home insurance etc.
When can I claim?
Once you are made involuntarily unemployed or you become unable to work due to incapacity, you can make a claim for benefits usually from day 30 – day 90 after the covered event happens. This again will vary. Some insurers will back date your claim to the very first days of unemployment, so do look out for this additional benefit.
How long will the benefits run for?
A typical mortgage payment protection insurance policy will provide the benefits for 12 to 24 months subject to the individual provider’s policy terms and conditions. Either way, while receiving these cash benefits, you will have the breathing space needed to look for alternative employment or start to recover.
Things to note
As with all things financial, there are some things that you should take note of when buying this cover. These include checking the policy for any exclusions which would render the cover useless; knowing fully what the cover entails; and, shopping around for the cover.
Many homeowners will but their mortgage payment insurance at the same time as taking out their home loan. However, it can be more financially beneficial to shop around among the standalone providers.
One such provider, the ethical British Insurance, offer mortgage payment protection insurance that can cost up to 40% less than the mainstream providers, making it an affordable way to get yourself adequately covered.
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