Strengthening your ability to keep up with mortgage payments is important and will give you some peace of mind if your circumstances change. Life insurance is the form of protection most of us would name as one that could pay down or pay off a mortgage.
Yet there are other situations (apart from death) that could mean it’s very difficult or even impossible to keep up with mortgage payments for an extended period – without help from other types of coverage.
Here are some protection policies you might want to have in place (alongside life insurance) to give your mortgage some security if you are unable to keep up with mortgage payments. Your adviser can help you work out the best option for your situation.
Critical illness protection pays out a one-off, lump sum if you’re diagnosed with a critical condition or disability that is covered by your policy. It can be offered when you buy life insurance, as extra coverage.
Income protection pays out a percentage of your monthly income if you are unable to work due to illness, an accident, or disability. Depending on the terms, you’ll receive a regular income until you either return to paid work, retire, pass away, or if the policy term comes to an end.
Mortgage payment protection insurance (MPPI) pays your monthly mortgage payments if you’re unable to make them due to an accident or illness.
What’s the difference between income protection and MPPI?
Income protection insurance is seen as more comprehensive than MPPI as it covers a proportion of your income and not just your monthly mortgage payments. It could also help to cover monthly bills aside from your mortgage. The period you’re protected with income protection tends to be longer than MPPI, too.
Your adviser will help you find a policy that works for you and your needs, in terms of the length of cover you want and how much the premium might be. MPPI premiums could be lower than those for income protection and more affordable.
Our partners Yellow Brick Mortgages are here to help if you’re looking for ways to protect your mortgage.
