What is Mortgage Payment Protection insurance?

Mortgage Payment Protection is a form of Income Protection insurance designed to help you pay your mortgage if you become unemployed, have an accident, or fall seriously ill. The more circumstances you wish to cover, the more expensive the monthly premiums. Policies sold by Banks & Building Societies are usually the most expensive. The amount that these policies pay out is not usually linked to your income, they usually allow all of the mortgage payment to be covered plus an additional amount to cover associated expenses (typically 25%.)

 
Mortgage Payment Protection Insurance is sometimes called MPPI or ASU (Accident, Sickness, Unemployment). A new breed of specialist independent providers has arisen, mostly selling Mortgage Payment Protection on the Internet. Some small providers have come and gone in recent years; the insurance being underwritten by a reputable insurer does not guarantee the survival of the provider.
 

What is Accident Sickness & Unemployment insurance?

Accident, Sickness and Unemployment or MPPI (Mortgage Payment Protection Insurance) is a policy that provides you with a tax-free monthly income if you're unable to work as a result of an accident, sickness or redundancy.

Accident Sickness & Unemployment  is a short term insurance policy and benefits do not tend to be paid for more than 1 or 2 years. Policies are often linked directly to mortgages, loans or income; these are called Mortgage Payment Protection, Loan Payment Protection and Income Payment Protection respectively.

Why do I need Mortgage Payment Protection Insurance?

Mortgage Payment Protection Insurance is designed to do exactly what it says on the tin. It will protect your Mortgage or Rent repayments if you suffer from an accident, sickness or from involuntary redundancy.

Mortgage Payment Protection Insurance will  payout a set amount, up to 150% of your mortgage/rent payment, each month to ensure you can keep a roof over your head and also provide a little extra to pay other bills as well.

Policies vary, but in most cases you can choose to cover yourself for a 12 month or 24 month claim period just in case the problem you are suffering from is longer term.

Generally,  our  monthly mortgage payments are our biggest outlay. Imagine having to make these payments without an income.
 
There will usually be a few extra exclusions on the unemployment/ redundancy part of the cover;

• choosing to leave
• end of contract
• seasonal/ temporary work
• voluntary retirement
• disciplinary action/ misconduct

In addition the Accident, Sickness part of the policy will tend to have the following exclusions.

• pre existing medical conditions
• stress or mental health problems(unless condition certified by a consultant)
• back problems(unless condition certified by a consultant)
• self inflicted injuries

Mortgage Payment Protection policies pay out for a short period until you can find work. Most have a 12 or very rarely a 24 month limit after which all payments to you stop, whether or not you are still out of work or unable to work. Policies do not generally offer a lump sum payment.
 
It may include unemployment and redundancy automatically or as an option. Some Insurers allow Unemployment cover to be taken on its own although this has become more difficult in times of high unemployment.
 
Mortgage Payment Protection policies generally run until the policyholders 65th birthday.
 
There is no investment element and no pay out at the end of the policy.

What type of Mortgage Payment Protection policy do I need?

There are all sorts of different Mortgage Payment Protection policies with small variations that could mean the difference between being able to claim in full and getting a reduced payout, or even nothing.
 
Deferred periods, i.e. the time between when you stop working and when you can claim for, vary. Sometimes you get a range of choices. Most policies however have a 30 day wait period. Also there are differences on the payout some policies being “back to day 1” others do not pay out until the end of the second month of a successful claim, others can be longer until they pay out.  In addition some Mortgage Payment Protection policies that include Unemployment Cover will expect you to have had the policy for a length of time before you can make a claim for Redundancy/Unemployment. This period typically varies between 30-120 days. Sometimes an Insurer will allow Unemployment cover to be “transferred” from an existing policy which will negate the initial exclusion period.
 
Some Mortgage Payment Protection policies bought independently; now offer longer periods of cover of 18 or 24 months, with deferred periods starting later, typically 60 days. A longer wait/deferred period may be more appropriate if the applicant for example had full pay from work for 2 months.
 
The sum insured will be the monthly mortgage payment, and is a fixed sum not affected by your actual income. As mentioned some Mortgage Payment Protection policies allow extra cover on top of the mortgage payment to cover other associated costs, such as Insurance premiums.
 
For decades, the price on these products has been irrespective of age, location, sex or occupation. Some new products now price by age band.

Who can apply for Mortgage Payment Protection Insurance?

Mortgage Payment Protection Insurance is generally available for all people in employment working more than 16 hours per week.   For an employed person, the unemployment part of the policy is relatively straightforward and would paid out on involuntary unemployment as long as outside the initial exclusion period and not known about prior to the policy being taken out.  For self employed people it is less clear cut, although the policies would pay out on complete cessation of trading and registration with the appropriate authorities, as long as this was involuntary. Some Insurers only allow “new” mortgage holders to apply for this cover.

How much will Mortgage Payment Protection insurance cost?

Premiums for your accident, sickness and unemployment/mortgage payment protection  cover are based on the amount of monthly benefit you require, your age, sex and the level of protection you have chosen.

Can I get Mortgage Payment Protection if I am self employed?

Yes, you are still eligible to protect yourself with Mortgage Payment Protection and Accident Sickness and Unemployment cover even if you are self employed. The Accident and Sickness side of your cover does not change if you are self employed however the unemployment element does change slightly. For the self employed, most insurance companies will require that you completely stop trading and register with the appropriate government agencies before a mortgage payment protection insurance unemployment claim can be made.
 

What are Short Term Income Protector policies?

Some Insurers who offer Mortgage Payment Protection policies also offer Income Protector policies. They are appropriate for people who are working, but are a tenant rather than a mortgage holder. They usually allow cover usually up to 50% of gross pre-disability income.  As with Mortgage Payment Protection policies they can be Accident Sickness and Unemployment. Accident & Sickness only or Unemployment only. 

Getting a quote is simple and easy, we search the market for the best prices and allow you to apply yourself online, or if you prefer you can speak to one of our Qualified Protection Advisors, who will provide advice at any stage of the process of getting Mortgage Payment Protection Insurance.