Mortgage Payment Protection Insurance

It is important as a UK employee to plan how you will protect your mortgage payment and other bills should you find yourself unable to work through ill health, after an accident, or following redundancy.

These eventualities can be covered through Mortgage Payment Protection Insurance; these policies pay out a set amount or percentage of your mortgage payments in the event you are unable to work through disability, or illness, or if you unexpectedly find yourself without employment, through no fault of your own.

Typically policies pay out for up to 12 months and premiums can be fairly high, therefore its important to shop around rather than be tempted to just opt for your mortgage lenders product, for no better reason than they are the first company to offer the policy to you.

Finance Search recommend our preferred Mortgage Payment Protection Insurance provider.

The cost of mortgage payment protection insurance policies vary depending on the level of cover, and can cost from between £4.50 to £5.50 per £100 of cover. Cost can be affected by the quality of the policy, and not all policies are the same, making it important to read the small print and any exclusions.

It is typical for homeowners to presume that if they were unable to work the Government would ensure their financial stability, however help from the Government is very limited and often this is only discovered when it's too late. For example, mortgage cover is means-tested and if you have more than £8,000 in savings you will receive nothing. If you are lucky enough to obtain assistance, the Government will only pay your mortgage interest, and if you took your mortgage out after October 1995 there is no help for the first nine months of unemployment or disability.

Whether you actually need Mortgage Payment Protection Insurance or not will depend on your personal circumstances; the type of job and what savings you have will determine the extent of your risk.

An Mortgage Payment Protection Insurance policy may be less essential for those with significant cash reserves or liquid assets, or who are confident about their employment based on the nature of their job, as well as being of less interest to those who would gain a substantial redundancy payment.