FAQs – Mortgage Payment Protection Insurance

What does it do?

If sickness or accidental injury prevents you from working, mortgage payment protection insurance is designed to ensure that your mortgage repayments (and any related life insurance and buildings and contents insurance premiums) continue to be made each month.

How does it differ from loan protection insurance?

In principle, not so very much. Whereas mortgage payment protection insurance will pay benefits equal to the amount of your monthly mortgage (and related insurance premium costs), loan protection would pay an amount equal to the monthly repayments on other types of loan.

What amount can I insure?

Most policies will have an upper ceiling on the amount of mortgage protection to be covered. Typically, this equates to 65% of your salary (before deductions) or to £2,000 a month.

For how long would the benefits be paid?

In the event of your incapacity or involuntary unemployment, most policies would pay out for a maximum of 12 months. It is possible to buy a policy that pays out for a longer period (of, say, 24 months), but you would need to pay a considerably higher monthly premium for this kind of cover.

Is anyone eligible for this type of insurance?

Clearly, it is important to ensure that you are eligible for the cover before you decide to buy it. As a general rule, you will need to be of employable age (18-65 years); be in regular employment at the start of the cover and have been employed for at least the previous six months; you will need to be resident and working in the UK, Channel Islands or Isle of Man. These are the illustrative general rules on eligibility – be certain to check the rules applying to your particular policy before you make the commitment to buy.

What exclusions are attached to the policy?

As with any type of insurance policy, it is essential that you read and understand the exclusions that attach to the policy. With respect to any claims relating to incapacity, these are most likely to concern pre-existing medical conditions. With respect to claims relating to unemployment, these will generally emphasise that unemployment must be involuntary – in other words, events such as voluntary redundancy, dismissal as a result of misconduct at work, or an impending redundancy already known about before the commencement of the insurance cover will all be specifically excluded.

Is there a minimum period of incapacity or unemployment before I can claim?

Once again, it is important to understand the conditions that apply to the particular policy you are interested in buying, since claims qualifying periods will vary. With the better quality policies, the qualifying period is typically 30 days of incapacity or involuntary unemployment. While some policies will then treat this initial period as a form of policy excess and pay benefits to cover the period beyond 30 days, the better quality policies will backdate the benefits payable to the first day of that period of incapacity or unemployment.

What does it cost?

Mortgage payment protection insurance is one of the most flexible types of insurance, where the cost of the premiums depends entirely on the amount you want to cover. Premiums are generally quoted in terms of each £100 of cover sought, so it is an easy calculation to work out how many £100 units you would need to cover in order to secure full protection of your monthly mortgage repayments.

Why Buy from British Insurance

Their staff are friendly, well trained and based in the UK
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They are recognised consumer champions and market leaders
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