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What is Mortgage Payment Protection Insurance?

If you are in the process of taking out a mortgage to buy a new home, you might have heard about something called mortgage payment protection insurance. This is a very specific type of insurance cover that will pay out so that you can keep on paying off your mortgage in the event that you are ever too unwell to work.

For most people, their monthly mortgage repayments are probably their biggest outgoing cost each month. If they were to unexpectedly lose their job or need to take a substantial length of time off work because of illness or injury, they might struggle to meet these repayments. If they miss some of their mortgage repayments, they could be at risk of losing their home. This is something that a lot of homeowners fear, especially these days as the value of houses is so high that they might be repaying large amounts each month.

Thankfully, this is where this insurance can really help. If you take out this kind of cover and do end up losing your job or falling ill, the insurance will pay out to cover your mortgage repayments. So, you will be able to enjoy the peace of mind that comes with knowing your home is safe even if you do lose your regular income very unexpectedly.

How Does It Work

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How does it work?

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Once you take out a policy for mortgage protection insurance, you will be instantly covered. You just need to keep on paying your regular monthly premiums in order to remain covered throughout the whole of your mortgage term. Some policies might let you pay annually rather than on a monthly basis. Those that do allow you to pay this way often give a slight discount on their annual payments. If you do end up losing your job or falling ill, then you will need to inform your mortgage payment protection insurance provider straight away. They will then review your case and see whether you are eligible to receive the insurance payouts. If you are, the payments from your insurance provider will then go directly to your mortgage provider. The payments will continue until you find a new job or are able to return to work after recovering from illness or injuries.

What are the different types of MPPI?

There are a a few different types of mortgage payment protection insurances that you should be aware of. You will need to consider them each to ensure that you take out the one that is the best kind for you and your individual situation.
One of the common forms of mortgage payment protection insurance only covers unemployment. So, if you have this policy, your provider will only take over your mortgage payments if you lose your job from redundancy. This form of cover doesn’t cover you if you have to stop working due to any health conditions, so you should carefully consider whether you do want to go with this type of policy.

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The second type of mortgage payment protection does actually cover you if you can no longer work because of an illness or injuries. So, this one will pay out if you do need to stop working because of a long-term illness or end up suffering a serious injury in an accident. One thing that this does not cover, though, is losing your job because of redundancy.
With the above two options, you will need to weigh up whether it is better for you to have some cover for either the chance of redundancy or a serious health condition. If you don’t want to choose between the two, there is still one other option – you could go for a complete mortgage payment protection insurance policy that will cover you in both instances. As these kinds of covers will protect you in both situations, they are the premiums for them are likely to be slightly higher than the other two policies.

Mortgage Payment Protection Insurance FAQ

The above information is all the basics that you need to know about mortgage payment protection insurance. Most people who contact us have a few other questions that they want settled before they do decide on the best type of cover for them. So, we’ve come up with this handy set of FAQs that should, hopefully, answer any further questions or queries that you might have. So, if you do have any niggling issues regarding this insurance, read on to find out more!

These days, there are so many workers and employees taking time off to address their mental health needs. As society becomes more understanding of these kinds of health issues, a lot more people are realising that this is a serious health concern that needs to be addressed with plenty of treatment and recovery. So, there is no wonder that so many people now ask whether their insurance will cover taking time off because of mental health issues. Unfortunately, these kinds of issues are not yet covered by these insurance policies. Many workers with this kind of insurance often struggle to show that they are unable to work as a result of their mental health. Do you think that taking out some mortgage payment protection insurance is the right course of action for you? If so, then get in touch with us today. We will be able to assess your individual situation and will let you know the best kind of policy for you. We are looking forward to taking your call and offering you our professional guidance!

While you are applying for this policy, you will need to disclose any health conditions that you have experienced in the last twelve months. Even though this will affect the price of your cover and your overall eligibility to get a policy, it is still essential that you declare anything. If you do not, but your insurance provider finds out about it at a later date, it could in fact void your whole policy. In some cases, you might be able to find any cover for some kinds of pre-existing conditions. Some providers might be able to cover you for them, but you may be faced with some very strict conditions. One very common example is that some insurance providers won’t let you claim for anything related to a pre-existing health condition during the first 12-24 months of your new policy. One health condition that some people find can be difficult to get insurance for is back issues. Some insurance providers will want to see radiological evidence before they pay out. If you do have any pre-existing conditions, it really is worth discussing them openly and honestly with the insurance company. Make sure you double check all of the small print in the contract before you sign as well.

Most of the time, the policy will only pay you from the day that you claim. This means that if you have already missed a couple of months’ worth of income before you put in a claim to your insurance provider, you probably won’t be paid for those months. That’s because they occurred before you put your claim in. However, there might be one option that allows you to claim for lost income before you did claim. You will just need to find a back to day one policy. Even though these policies tend to be quite a bit more expensive than standard ones, you will find that these cover any missed income that you incurred before you made a claim on your insurance. Don’t forget that all policies will pay in arrears. So, you might need to wait one month to receive a payout after you do actually put in a claim. For some policies, it might not matter if you do have a waiting period – you will still be paid for the time that you did wait.

You probably won’t be covered as soon as you take out a new policy. Most people who do take out a new policy will have to wait a set number of months before the cover actually starts. Unfortunately, during these months during which you are waiting for the cover to start, you won’t be able to claim a penny. This is what is known as the exclusion period. You might also hear this referred to as the “buffer period”. Most of the time, this exclusion period is anywhere between 30 and 180 days long, just like the excess period. Generally speaking, unemployment cover will have a longer exclusion period than cover for sickness and injury. That is to stop people taking out the insurance if they know that they will be made unemployed or redundant in the very near future.

There are a lot of different factors that will be used by the insurance provider to decide on exactly how much your mortgage payment protection will cost. As mentioned before, though, the policies that cover both redundancy and health issues tend to be a lot more expensive than policies that only cover one or the other. The factors that insurance providers use to decide on your quote normally include things like your age and how much your current monthly mortgage repayments are. Some providers might also consider the job that you currently do as well. Not only that, though, but one other factor that is sometimes taken into consideration is your current financial situation and how many savings you have at the minute. Generally speaking, though, your mortgage repayments won’t be too expensive as they are usually a small percentage of the average monthly wage. For instance, the average monthly quote for a monthly premium for both redundancy and health cover is around £19.27 for a 30 year old. This average price slowly rises the older the policy holder is, though. For instance, it increases to £23.55 for 40 year olds and then to £24.14 for 50 year olds.

There is a chance that the job you have will have some slight effect on the amount you have to pay for your monthly premiums. That’s because some jobs are riskier than others, which means that those who work in them are a lot more likely to be made redundant or end up in an accident compared to individuals in different careers. The majority of insurance providers will split up all types of careers into different categories. Whichever category your job is will depend on how risky it is perceived as being. Here is a quick rundown of the main risk categories. Class 1 – This is the least-risky category and, as a result, people with jobs in this first category should find that their insurance premiums are very affordable. They include careers such as managers, admin staff, computer programmers, secretaries, staff with limited mileage. Class 2 – These are workers who generally have ore business mileage, including the likes of skilled manual workers, shop assistants, engineers, florists. Class 3 – Class 3 includes quite a few skilled manual workers as well as some workers who are classed as semi-skilled. Teachers, plumbers, and care workers also fall into this category as well. Class 4 – This is the riskiest category. Heavy manual workers fall into this group, as do some unskilled workers like bartenders, mechanics, and construction workers. One thing that you might have noticed is that there is no mention of self-employed workers in the above categories. That’s because most mortgage payment protection providers don’t actually cover freelancers or the self-employed. Thankfully, though, things are starting to change in the industry and there are now a handful of providers that do offer plans for these types of workers. You just need to be aware that there might not be much choice between providers! Unfortunately, if you are on a casual contract or a fixed-term contract, then it will be a lot harder trying to find adequate protection for your mortgage as these types of workers are still exempt from most policies.
You can’t start claiming on your mortgage protection payment protection insurance straight away when you do find that you can’t work. There will be a set number of days that you will need to wait until you can start your claim. Your insurance provider will discuss these with you when you first take out the policy. If you can’t remember, check the small print in your policy documents. This waiting period (sometimes called the excess period) tends to be anywhere between 30 and 180 days. Most insurers will give you the chance to choose the length of your waiting period. Generally speaking, the longer it is, the cheaper your premiums will be. If you do opt for a long waiting period, though, it is important that you have plenty of savings as you may need to rely on these once your income has ended and you are waiting for your first insurance payout. Some people also go for a longer waiting period if their employer offers sickness benefits for a couple of months, as they know they will receive some form of payment when they are off work at the start.
The next big question on most customers’ lips is how much their insurance will pay out. Most providers will offer you a set amount for up to two years. When you take out the policy, the provider will usually let you know then what the agreed payout for those two years will be. Some policy providers will also let you decide how the cover pays out to you if you do ever need it to. For instance, some policies will only pay out enough to cover your mortgage repayments. However, there are some that will give you the chance to request payouts that also cover your bills on top of your mortgage. These policies might not pay out the full amount of your bills, but the majority will pay you 125% of your monthly mortgage repayment so that you have some money left over to go towards your important monthly bills. Some providers will offer you one other option as well. This is the chance to base your cover on your salary. In this case, customers can request their provider to pay out up to 50% of your usual take-home salary or wage each month. One thing to remember is that most mortgage payment protection providers will only pay out for a maximum of two years. If you think that you will need a policy that pays out for a longer period, it may be best for you to look into a general income protection insurance policy instead.

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