Payment Protection on Mortgage

If you are a home-owner, then 2011 should be the year that you start to take out payment protection on mortgage insurance. This type of insurance will enable you to keep up your mortgage payments should you become unemployed for a length of time. Even if your job is secure, accident and injury can happen at any time, and the resulting loss in unemployment could affect your monthly income. For a small monthly premium, taking out mortgage protection insurance will help you to maintain regular payments to your mortgage.

Although you may be entitled to claim benefits if you are sick, this benefit is small, and you may not always be eligible. Payment protection on Insurance means you could get up to 75% of your gross income. Other associated bills could be covered within your payment insurance too.

You are eligible to apply for payment protection on Insurance if….

  • you are a national
  • are aged between 18 and 64
  • you are in paid work
  • you are working at least 16 hours per week

For some policies, you will also need to be up to date with your monthly repayments. You will also need to be named on the mortgage agreement. There are also other criteria to consider when taking payment protection on mortgage which varies between providers. You may also be excluded if you have any per-existing medical conditions, or you have seen a doctor in the last 12 months.

When taking out cover for Payment Protection on Mortgage, you will need to decide on the deferment period – this is the length of time that the policy takes before it will pay you. The mortgage protection insurance will typically be more expensive if the deferment period is shorter.

Think too about the length of cover. MP-PI will usually pay you for up to two years – during this period, it is expected that you will have found alternative employment, or recovered from your illness or injury.

There are different types of mortgage payment protection. For example, you could decide to take unemployment insurance only, or just cover for accident and sickness. Some mortgage protection plans even cover you if you need to leave work to become a career.

What information do I need to declare?

• Your date of birth

• Your name and address

• Your bank details for your monthly direct debit.

You will also need to state the amount of monthly benefit required. This will normally be based on your monthly mortgage payments and associated costs, for example, buildings and contents insurance.

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