Mortgage insurance could help you to avoid arrears which could lead to repossession. Mortgage lenders will give you some time to catch up on the repayments you have missed but it could take several months for you to find work or recover so this might not be possible. The policy would provide an income should you become unable to work due to incapacity such as with illness or accident and it will pay out if you became redundant.
You could take out mortgage insurance with the lender on the high street but generally this would be one of the dearest ways of taking your policy and you can usually get it cheaper if you shop around with a standalone provider and compare the cost of the premiums. You could decide on the sum of your mortgage repayment you want to protect which would need to be agreed by the provider. This would then become your income should you have to make a claim on the policy. You would need to wait for a period of time before you put in your claim and with some providers this would be 30 days and with others it could be up to the 90th day so this will have to be checked before you take out your cover. If your policy does not payout until the 90th day then you could already be in mortgage arrears by some 3 months by the time you begin to receive benefit and this could be very stressful. Also check how long your benefits might continue up to as there are providers that offer to pay an income, if needed, for up to the 12th months and with others it could be extended to the 24th month. If you do have a 24 month policy to rely on then of course the premiums for the protection would be more than if you could have benefits over 12 months if needed.
You also have to decide on what events you want to cover. Of course both unemployment and incapacity can be protected against in the same mortgage payment protection insurance (MPPI) policy and you would be able to claim should you suffer from either event. You could also choose just to take out a policy that would payout for unemployment if you have a good sick pay plan to rely on. However you could choose just to take out a policy for incapacity alone if this would suit you better. The events that you decide to protect would go towards how much you would pay for the policy.
You should also check your mortgage insurance policy to find out if the provider would pay out on your payment protection should you need to give up full time work to stay home and look after a family member. However it is only the most generous of providers that would provide you with this added form of security.
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