Mortgage Protection Insurance UK
What is Mortgage Protection Insurance in the UK?
In the event that you lose your job without doing anything wrong or become unable to work as a result of a serious illness or injury, mortgage payment protection insurance in the UK (MPPI), a type of income protection, will cover your monthly mortgage payments.
MPPI may give you a specific amount each month if you have to submit a claim. This might be enough to cover your mortgage, or you might elect to get a policy that would pay out 125% of your mortgage payments in order to cover other costs as well.
Most mortgage insurance plans provide coverage for up to 12 months or until you start working again, whichever comes first.
Why Might I Need Mortgage Insurance?
The mortgage is one of the most significant monthly expenses for most people. It is crucial to think about how you would continue to make your mortgage payment if you or your partner lost your source of income in light of this.
Mortgage protection insurance in the UK acts as a safety net in case you are unable to make your regular payments. It could ultimately save you from defaulting on your loan and losing your home.
If losing your work would make it difficult for you to make your mortgage payments or if you are self-employed and ineligible for unemployment or sick pay, mortgage protection insurance in the UK may be the perfect choice for you.
You might also want to think about other policy possibilities like life insurance, critical sickness protection, or income protection.
Why is Mortgage Protection Insurance in the UK Important?
Your monthly mortgage payments are covered if you have mortgage protection insurance in the UK in place. This is helpful if you ever find that for whatever reason you are unable to pay for them.
By having a mortgage protection insurance policy in place, you can avoid going into default on your mortgage and risk having your property taken back.
Mortgage protection insurance in the UK, also known as mortgage payment protection insurance (MPPI), come into effect when you’ve missed work for a predetermined amount of time (usually between 30 and 60 days) due to illness, an accident, or being laid off. After this time, your insurance company will start paying you a predetermined sum each month.
A mortgage protection insurance policy might be useful if you were concerned about your choices for paying your mortgage in the event of a personal or financial downturn.
Your monthly mortgage payments are covered by a safety net created by mortgage protection. If you ever find yourself unable to pay them owing to a variety of circumstances, this will support you. You and your family are better protected with mortgage protection insurance in the UK.
What Does Mortgage Protection Cover in the UK?
Depending on your personal circumstances and what you want covered, different tiers of mortgage payment protection insurance in the UK are offered:
- Accident and sickness – insurance can help pay your mortgage if you can’t work due to a serious illness or injury. But if you lose your employment, it won’t pay out.
- Unemployment – this will give you an income to cover your mortgage if you’re made redundant from your job. It won’t pay out for accident and sickness.
- The most complete coverage is provided by accident, sickness, and unemployment insurance – which covers both losing your job and being unable to work due to a major illness or injury.
Your specific circumstances, including age, employment status, salary, and mortgage payments, will determine how much your insurance will cost. Your rates will probably be higher if you work manual labour because you are statistically more likely to suffer a serious injury than someone who works a desk job.
Although there may be some exclusions you need to be aware of, MPPI can be used by employed employees as well as self-employed and contract workers.
What Doesn’t Mortgage Protection Insurance Cover in the UK?
When you get a mortgage protection insurance policy in the UK, there are some things that you won’t be protected for, just like with all other types of insurance. Typical examples of these include:
- Voluntary redundancy
- Prior knowledge of risk of redundancy
- Getting sacked from your job
- Pre-existing medical conditions
- Stress or back-related injuries and illnesses (unless strict criteria are met)
- Self-inflicted injuries.
It’s unlikely that you will be able to file for unemployment benefits if you are self-employed. This is due to the fact that you are independent of an employer and responsible for seeking your own work.
Before you get mortgage protection insurance in the UK, thoroughly examine the policy terms to see what is and is not covered.
Alternatives to Mortgage Protection Insurance in the UK
In the event of death, life insurance in the UK will provide a one-time payment that is commonly used to settle any remaining debts, such as a mortgage. This won’t help you if you are sick or laid off and unable to work, though. Although the list of illnesses covered varies depending on the provider, critical illness insurance may pay out if you are discovered to have one of the serious illnesses the policy covers.
You might find that even for extended periods, your employer will provide you sick time pay. However, it’s unlikely that this will pay your full salary, so you might be short on cash.
Income protection insurance in the UK gives you a substitute income if you are unable to work, usually due to illness or injury. Income protection insurance comes in a variety of forms and offers both short- and long-term coverage. In addition to maintaining your mortgage payments, it might offer a vital safety net to pay bills and other living expenses.
How Can I Get the Cheapest Mortgage Protection Insurance Policy in the UK
You can take a few actions to lower the cost of your mortgage protection insurance.
- Check the sick leave policy at your job.
If you suffer a major sickness or accident and can’t work, your employer may have a company plan that entitles you to additional benefits beyond the minimum amount of sick pay. Your mortgage payments can be temporarily covered by this. Then, you can extend the deferral time, which should lower your premium.
- Factor in your savings.
If you have a substantial sum of money saved up, you could be able to pay your mortgage till later. The cost of your mortgage protection insurance will decrease the less likely you are to file a claim.
- If you have life insurance, you might have additional protection for your mortgage.
Before purchasing a new insurance policy, it is wise to confirm what is already covered. For instance, you might already have critical illness coverage if you carry life insurance. If you’re told you have a serious condition like cancer or a stroke, this could help you pay off your mortgage.
- Compare prices to get the best offer for you.
Make sure to evaluate different providers and different levels of coverage because the amount you’ll need to pay relies on a number of variables. We can provide you with a price right away.
FAQs
Can I Claim on my Mortgage Protection Insurance straight away?
No. There is normally a waiting period before you can file a claim for unemployment insurance. This is done to discourage people from buying insurance when they expect to lose their jobs.
Additionally, for all MPPI policies, there is a predefined waiting period from the time you lost your capacity to work to the start of your payouts. This stage, also known as the postponed period, often lasts one to six months. Think about selecting a delayed time based on the expiration of your employer’s sick leave.
Does everyone with a mortgage need Mortgage Protection Insurance?
No, not always. You might not need it if you know you’ll likely receive a sizable redundancy payout or if your business offers extensive sick leave benefits. If you have health insurance, you might also be covered; if so, check first.
If you are qualified for government benefits that will assist you in paying your mortgage, you may not need mortgage insurance. However, you should be aware that these Support for Mortgage Interest (SMI) benefits only cover the interest on your mortgage and that, depending on your situation, there may be a 39-week wait before the first payment is made. Additionally, they are a loan that you must repay when you sell your house.
How Can I Compare Mortgage Protection Insurance in the UK?
With our comparison service, it’s simple. Just enter some information about yourself and the kind of cover you’re looking for:
- Sickness and accidents (critical illness cover)
- Unemployment
- Unemployment, illness, and accidents.
Our experts will get back to you with your personalised quote.
Can I Get Income Protection if I am Self-Employed?
Yes – and because you don’t have the same rights in terms of sick pay as PAYE employees, it may be more important that you have the right cover in place. Income protection insurance in the UK would help you keep up with your mortgage, monthly bills, and other outgoings. Long-term cover is also available.
Will being a smoker affect my Mortgage Protection quote?
If you’re a smoker or vaper, you will be targeted with higher premiums. This is because you’re deemed a higher risk – i.e., more likely to fall ill and make a claim.
Can I claim for time off work for mental health reasons?
Although mental health issues such as stress and anxiety are common reasons for needing time off work, it can often be quite difficult to claim for these types of conditions. You’ll usually need to provide evidence from a qualified psychiatrist that your mental health is making you unable to work.