Which is the best mortgage payment protection insurance?
Which is the cheapest mortgage payment protection insurance, having this type of policy would have given huge peace of mind during the pandemic, but is this the right policy for you.
What is mortgage payment protection insurance?
Mortgages are usually your biggest monthly outgoings and if you were left unable to work due to illness or redundancy, you would still need to be able to make your payments or be at risk of losing your home. Mortgage payment protection insurance provides a monthly benefit to allow you to continue paying off your mortgage and will generally pay out a set amount each month for up to two years.
What types of mortgage payment protection insurance are available?
There are three main types of mortgage payment protection insurance, and these are:
Unemployment only: will cover you only if you are made redundant
Accident and sickness only: will cover you if you suffer a serious injury or have a long-term illness
Accident, sickness and unemployment: will cover you if you are made redundant, suffer a serious injury or have a long-term illness
When will the mortgage payment protection insurance be paid?
When you take out the policy, an excess period (or waiting period) is set which is usually between 30 and 180 days. This is the amount of time you have to be off work before you can claim and start receiving your payments.
Depending on the policy you take out, you may be able to choose to cover only the cost of your mortgage, or up to 125% of the cost of your mortgage to allow you to cover some bills too. Some providers may let you choose cover based on your salary and will typically pay up to 50% of your monthly salary.
How much does mortgage payment protection insurance cost?
The cost of mortgage payment protection insurance will depend on the level of cover you are taking out and other factors such as your age. Therefore, the younger you are and the lower your mortgage repayments, the less your premiums are likely to be.
Factoring in whether your mortgage payment protection insurance covers redundancy only or accident, sickness and unemployment also plays a part in cost. The more comprehensive the cover, the more expensive it is going to be.
Many insurers also categorise jobs by risk factors, with jobs such as administrative staff being the lowest risk and heavy manual workers being the highest risk. Therefore, the premiums you will pay depend on your individual circumstances.
Do I need mortgage payment protection insurance?
If you were unable to work due to accident, sickness or unemployment, and you would not be able to cover the cost of your mortgage each month, then mortgage payment protection insurance may be an option for you. It is worth remembering, however, that this type of protection generally only pays out for a period of up to two years. Therefore, if you were unable to work for a longer period of time, then an income protection policy may be more suitable.
If you have a partner who could comfortably cover the mortgage payments each month, or sufficient savings to cover you for a period of time, then mortgage payment protection insurance may not be for you.
Things to consider before taking mortgage payment protection insurance
Mortgage payment protection insurance isn’t right for everyone, but it may be a good option for you if:
You have a mortgage, and your savings couldn’t cover your repayments
You are the main earner of the family and would not be able to cover your mortgage in the event of you being unable to work
Your employer does not offer sick pay or if it only provides you with sick pay for a short period of time
if government benefits would not be enough to support your standard of living
Woodward Financials were awarded best wealth management firm in 2021 and again in 2022 and have a team of advisers ready to help you answer these questions and guide you through the right mortgage payment protection insurance policy for you.
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