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Mortgage protection insurance
Mortgage protection insurance is a specific type of income protection insurance (IPI) that provides a monthly sum to meet your mortgage repayments should you be unable to work.
What is mortgage protection insurance?
For many of us, our mortgage is our biggest monthly outgoing, and being unable to make the repayments through no fault of our own - such as due to illness, an accident or involuntary unemployment - can be a huge worry. Figures from the Council of Mortgage Lenders show that 7,700 homes in the UK were repossessed in 2016.
Mortgage payment protection insurance (MPPI) takes care of things should an emergency happen, preventing your home from being repossessed until you recover your health or find a new job.
Depending on your circumstances, some Government support is available to help with mortgage payments, but these usually cover just the interest and not the repayments themselves. If you’re struggling to pay your mortgage, talk to your lender in the first instance to see what support they can offer.
How does mortgage protection insurance work?
As with any insurance, you can choose mortgage protection insurance to suit your particular lifestyle and needs, with the premium, or cost, depending on what’s included in the policy. You can choose MPPI to protect against:
Accident and sickness
Injury or illness could potentially prevent you working for months and leave you unable to pay the bills, unless your employer offers a very generous sick pay scheme. Accident and sickness mortgage protection insurance takes away some of that financial worry.
Mortgage protection insurance can help support you while you find a new job if your employer makes you involuntarily redundant. However, you may not be covered if you choose to take redundancy or if you resign from your job, so make sure you check the conditions of your policy carefully.
Some mortgage protection insurance policies include accident, sickness and unemployment and are known as ASU policies.
What do I need to know about mortgage protection insurance?
Insurers offer a variety of MPPI policies and it’s essential to understand what is and isn’t included, as well as to plan for any shortfall in cover. For example, many policies don’t begin until 31 or 60 days after you’ve been unable to work and, although payments are usually backdated to ‘day one’, you would need to plan how to meet those one or two mortgage payments in the meantime.
Also, mortgage protection insurance won’t pay your mortgage indefinitely! Some policies provide cover for up to two years while others cover for a year, although some accident and sickness policies will meet repayments until you reach retirement age.
Depending on your policy, benefits of mortgage protection insurance can include:
- Tax-free monthly payments of up to 70% of your gross income
- Repayments of associated bills including council tax, utility bills and internet and TV subscriptions
- Payments backdated to the day you stopped working
- Support in looking for a new job following redundancy
Why compare mortgage protection insurance quotes with ActiveQuote.com?
Because we’re the experts! ActiveQuote is a leading income protection insurance specialist comparison website and broker, working with chosen providers to find you the right policy at a price you can afford. You can buy your policy quickly and simply online or, if you prefer to speak to a product specialist in person, our team can run through the details with you and clarify any points you need to raise.