How to protect your mortgage

Income protection

If you are unable to work due to illness or injury, income protection insurance provides a replacement income. This is typically 50% – 65% of your earnings rather than the full amount. There is a pre-agreed waiting period before you can start claiming the financial support from this insurance. The deferred period is decided at the time of purchase and can be anything from four weeks to a year. Once you have made a claim, your insurer will keep paying out until you retire, return to work or die – whichever is sooner.

Mortgage payment protection insurance (MPPI)

MPPI is a form of income protection which covers your mortgage repayments if you can’t work due to involuntary redundancy, illness or injury. MPPI can fully cover your monthly repayments as long as they don’t exceed 65% of your gross monthly salary. Most insurers will support you for up to 12 months or until you return to work – whichever is sooner.

Critical illness cover

Critical illness cover pays out a lump sum if you are diagnosed with a serious illness. The conditions and illnesses that are covered vary depending on the insurer but usually include cancer, stroke and heart attack. A payout could be used to replace any lost income that usually funds your mortgage. Once a payout has been made, the policy ends.

Life insurance

Life cover would provide financial support to your loved ones in the event of your death. Decreasing term insurance is designed to be used with a repayment mortgage; the value of your payout reduces over time to reflect the decreasing amount of debt you have left to repay. This usually only covers the cost of the mortgage, but it tends to be cheaper than other forms of life insurance. Level term insurance and whole of life cover both provide a lump sum that can go towards anything, including household bills, a mortgage and other living expenses.

Family income benefit (FIB)

FIB is a type of life insurance which provides regular financial support to your family if you die or are diagnosed with a terminal illness. Unlike other forms of life cover, your family would receive an ongoing monthly income instead of a lump sum. The policy lasts for a fixed period so if you die during the term, the insurer will make regular payouts until the end of the policy.

There are a range of ways to protect your mortgage, so we are on hand to help you decide what’s right for you.

As with all insurance policies, conditions and exclusions will apply
Your home may be repossessed if you do not keep up repayments on your mortgage