Mortgage protection insurance is a type of life insurance that you can take out to cover the cost of your mortgage payments should you become unable to work due to an accident or illness. It’s a type of short-term insurance designed to cover a short time period, usually up to a year.
Mortgage protection insurance can be defined as a life insurance policy that covers the cost of the mortgage payments if the policyholder is no longer able to make those payments. Mortgage protection insurance is also known as mortgage payment protection insurance (MEPI), mortgage payment protection (MPPI) or mortgage payment insurance. Income protection insurance is another type of cover that could be used to protect the payments on your mortgage.
A mortgage is a loan secured against your home. If you are paying off your own mortgage you are likely to have some spare money for other things. However, if you are paying off someone else’s mortgage you are likely to have less to spare. If something happened to you, your loved ones would have to pay the mortgage. Unfortunately, many people don’t have life insurance, so their loved ones have to struggle to pay their mortgage without them. Mortgage protection insurance, commonly known as mortgage payment protection insurance, protects your family from financial difficulties if you are ever unable to work. It will pay your mortgage payments on your behalf so you don’t have to worry about your family’s financial security if you are unable to work.
Having a mortgage can be a very stressful experience, especially when you experience change in your life. This could be because of a personal situation, such as a divorce, or a job crisis. When life throws you curveballs, it’s good to know that you’re covered. With mortgage protection insurance, you could be refunded up to 75% of your mortgage if you were to lose your job — or you might be financially supported while you try to find a new position. All in all, it’s smart to ensure you and your family’s financial security — and we can help you do this!
Only covers you if are made redundant
Mortgage protection insurance is an insurance policy that protects the policyholder from mortgage payments for a period of time in the event of long term disability or death.
Before claiming, you will need to be off work for a specified number of days. This is known as the waiting period, or excess period, and it can range from 30 to 180 days.
our job or the type of employment contract you have may affect the policy you can get. Most insurers will categorise jobs in different risk categories. Below is an example of how insurers may classify your job’s risk level, with Class 4 being the highest risk.
Class 1: Professionals; managers; administrative staff; staff with limited business mileage; admin clerks; computer programmers; secretaries.
Class 2: Some workers with high business mileage; skilled manual workers; engineers; florists; shop assistants
Class 3: Skilled manual workers and some semi-skilled workers; care workers; plumbers; teachers
Class 4: Heavy manual workers and some unskilled workers; bartenders; construction workers; mechanics
Most providers will now cater for self-employed people but read the small print carefully to check you’re not exempt – for example, if you’re on a casual or fixed-term contract.
Although they may sound similar, mortgage payment protection insurance is not the same as payment protection insurance (PPI). While PPI covers unsecured finance and payments are made to the lender, mortgage payment protection insurance only covers mortgage payments and is paid directly to you. Crucially, both policies are designed to cover a single debt – but won’t cover other payments, such as council tax and utility bills, you might be unable to meet if you were off sick.
If you’ve experienced health problems in the past 12 months, this is likely to affect your ability to get mortgage payment protection insurance. Some policies will provide no cover at all for pre-existing medical conditions, whereas others have strict criteria. For example, you won’t normally be able to claim for time off due to a pre-existing condition if it recurs within 12 or 24 months (depending on the policy) of taking out the policy. Also, if you have an issue with your back, you may find it tricky to claim – you may need to provide radiological evidence before your insurer will pay out. There will be other medical exclusions and conditions, too, which you should check carefully before taking out a policy.