Mortgage protection insurance provides security against losing your home due to mortgage arrears. Mortgage arrears of just a couple of months would set alarm bells ringing with your lender. If you are unable to repay what you owe and maintain your mortgage they will take repossession of your home through the courts. With the protection behind you there would be a large amount of income coming into the home from the policy, for a period of time, which would allow you to recover from your incapacity or gives time to look for work.

The amount of income the mortgage protection insurance would send your way each month is the amount you chose to protect and which was pre-agreed by the provider. This amount is tax free each month once a deferment period has passed and for the term. The deferment period is the amount of time that you would have to be unemployed or incapacitated before making a claim.

Usually it would fall in the regions of 30 to 90 days with some providers dating back the benefit to the first day of your unemployment or incapacity. You would need to check this in the terms offered by the provider when looking for the protection and you would also have to check how long protection lasts. With some providers you would be able to rely on 12 monthly payments for the policy and with others it could be 24 months of cover. While this could provide adequate time for you to have found another position or to have made a recovery the protection would cease at this time regardless.

You could also choose the events you want to cover your mortgage repayments against. Protection can be taken out to insure against unemployment and incapacity together which would allow you to make a claim should you become a victim to either of the events. If your circumstances meant you did not need to protect against both events, such as if your employer paid out full sick pay, then you might want to just protect against redundancy alone. Alternatively you could just choose to protect against incapacity alone if this were to suit your lifestyle better.

Mortgage protection insurance can be a better form of safety net to rely on than applying for State benefits. The State might pay an income towards helping you to remain in your home but this income would only go towards any interest payment and up to a certain amount. You would also not see any benefit from several weeks and by this time mortgage arrears could have already occurred. Savings might also not be a reliable form of insurance as they could run out well before you have recovered or have searched for and found work.

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