Most people are all too aware of the importance of keeping up with repayments on a home. Despite this, not everyone thinks about how they would meet these commitments if they were suddenly unable to work due to a serious long-term sickness or because they faced a long lay off due to an accident. There is also the threat of involuntary redundancy - which can come out of the blue should a company’s fortunes take a sudden downturn. Mortgage payment protection insurance is a type of policy designed to help keep the roof over someone’s head even in the event that their income is suddenly stripped from them through no fault of their own.
Sometimes referred to as MPPI, a policy of this type will provide regular payments for a period of 12 to 24 months, depending on the insurer, to be used towards the cost of the mortgage. Some policies also feature a carer cover option which provides a pre-agreed level of income for someone who has to leave work to become a full-time carer.
Note mortgage payment protection should not be confused with mortgage life protection, which is a type of policy designed to pay off the remainder of someone’s mortgage in the event of their death.
Payments provided by a mortgage will arrive in a policy holder’s bank account tax-free and will normally go towards the payment and associated costs like insurance, bills, and even food shopping. The cash sums normally start to arrive anywhere between 30 and 90 days after someone loses their income-although this depends on the specific terms offered by different insurers for different policies.
Different levels of cover are also available for different types of circumstances. For example, a worker might have been with a firm long enough to have guaranteed themselves a healthy redundancy payout should the dreaded envelope arrive. This means they may want to take out cover which only guards against accident and sickness. Likewise, policies are available which focus their cover only on redundancy if this is the main concern, although a person will not be able to claim if it can be shown they knew they were going to be let go before they took a policy out.
Even with these levels of benefit and flexibility, some people may fear that insurance to protect their mortgage could simply be too much of an added cost. Thankfully, a competitive market means cheap cover is available which will also provide detailed protection.
Looking further than high street insurance providers and lenders who offer cover attached to mortgages can be a good starting point. Some more independent companies like protection specialists British Insurance can help consumers save up to 40 per cent on the costs of mortgage payment protection insurance compared to high street lenders. In some cases protection can be bought for just a few pounds per £100 of cover.
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