Mortgage Payment Protection
This is also commonly know as
Accident, Sickness and Unemployment Insurance
There are two major reasons for insuring your mortgage.
The first is in case you can't pay it owing to accident,
sickness or unemployment. The second is is in
case you die. This section covers the former
In the good old days, the state would give you a lot of
help if you were unemployed or became disabled and couldn't
afford your mortgage payments.
Unfortunately that's changed completely.
Anyone who has mortgaged since 1st October 1995,
is now only eligible for state assistance for nine
Any state assistance is means tested - ie you're checked
to make sure you're fully deserving.
Any help you get from the state would only cover the interest
payments i.e. not endowment
payments or capital
If your mortgage is for more than
�100,000 you won't get any help at all from the state.
What you need to cover you for unemployment, sickness or
an accident affecting your ability to pay your mortgage
is Mortgage Payment Protection Insurance.
Only 20% of mortgage payers has this type of policy - which
is why the government makes occasional grunts about making
it compulsory. But don't expect anything realistic, anytime
soon. You're on your own so make sure you're covered.
When choosing which policy to buy, what you're
looking for is:
- When do pay outs start ? - usually
after an "excess"
of 30 to 60 days.
- How long do they last ? - usually only
for 12 months but sometimes 24 months.
A reasonable cost for a Mortgage Payment Protection policy
would be around �5 a month for every �100 of monthly payments
for 12 months cover.
Payments would start after an "excess"
of 30 days. (In other words the insurance starts paying
your mortgage after 30 days).
The highest prices are around �7 for every �100 of monthly
payments - though some of these give 2 years cover.
Spread over a year this could amount to a difference of
Over the life of your mortgage it would add up to �4,500.
(Or even £12,000 when including interest payments
if you'd saved it instead).
Whatever the price, you always need to make sure
that the policy really would cover what you'd need.
If you wanted to be covered for longer than the standard
12 or 24 months - that most Mortgage Payment Protection
Insurance policies provide - then you may want
to look at some kind of Permanent
a quote now?
and Contents Insurance
Payment Protection Insurance
Protection Decreasing Term Assurance
Insurance Tie Ins