Mortgage Payment Protection Insurance (MPPI) – Do I Need Mortgage Payment Protection Insurance?

What is Mortgage Payment Protection Insurance?

Mortgage payment protection insurance (MPPI) covers the cost of your mortgage payments if you are unable to. Should you become ill, lose your job or be in an accident that stops you from working, this policy offers reassurance that your mortgage repayments will still be met.

How Does Mortgage Payment Protection Insurance Work?

Your mortgage payment protection insurance provider will pay you a monthly income for a set term if you cannot work, with most policies offering a payout term of up to two years.

Some providers offer you different options for how your policy can be paid out. For instance, you might choose to cover the exact cost of your mortgage or a little extra to cover other bills too (however, as expected, the more you ask for, the higher your premiums will be).

You won’t always be able to claim MPPI immediately – you will usually need to be off work for a specified number of days (ranging from 30 to 180 days) before claiming MPPI. This is referred to as the waiting period, and the longer the waiting period, the cheaper your policy is likely to be.

It is important to note that if you are off sick for more than two years, MPPI is unlikely to cover all of your needs. In this case, income protection insurance may be more suitable as this can pay out until retirement, death or your return to work. Income protection, however, doesn’t pay out in the event that you become unemployed.

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Types of Mortgage Payment Protection Insurance

When applying for MPPI, you can choose from three types of cover:

  • Unemployment only (provides cover if you are made redundant)
  • Accident and sickness only (provides cover if you have a long-term illness or suffer a serious injury)
  • Accident, sickness and unemployment (provides cover if you are made redundant and if you have a long-term illness or suffer a serious injury)

What Does Mortgage Payment Protection Insurance Cost?

Your mortgage payment premiums will vary based on a whole variety of factors, including:

  • Your salary
  • The size of your mortgage repayments
  • The type of policy you choose
  • Your age
  • How soon you want to be covered

There are some things you can do in order to lower the amount you pay for mortgage protection insurance. For example, if you have a considerable amount saved up, you can factor in your savings as you might be able to cover your mortgage repayments yourself for a while. The less likely you are to claim, the lower your mortgage protection insurance will be.

Also, check your employer’s sick pay as they may have a company scheme that entitles you to more than the statutory sick pay, which may cover your mortgage payments for a period. If you can cover your mortgage payments for a little while, you can then have a longer waiting period which can reduce your premiums.

Mortgage Payment Protection Insurance Vs Mortgage Life Insurance

Whereas mortgage payment protection insurance will pay out if you can’t work due to illness or injury, mortgage life insurance pays out to cover your mortgage payments when you pass away.

Do You Need Mortgage Payment Protection Insurance?

For most people, their mortgage is their largest monthly outgoing. If you suddenly became unwell or unemployed, for example, you’d still be required to make your repayments, or you’d risk losing your home. MPPI ensures that you are still able to pay off your mortgage even if you are no longer receiving a secure income.

So, if you wouldn’t be able to cover your mortgage payments and other outgoings with your savings, it is certainly worth considering mortgage payment protection insurance.

What is the Best Mortgage Payment Protection Insurance?

The best cover type for you depends on your personal situation. MPPI isn’t one-size-fits-all so it’s imperative you choose the most appropriate type of cover for your needs.

Here at The Mortgage Heroes, we specialise in helping people with their insurance. We have years of experience in mortgages and are experts at ensuring people like you find the right cover.

If you’re looking at the different insurance options available and want professional advice, please don’t hesitate to get in touch with one of our heroes today – we’ll listen to you, find out about your specific situation and help you to secure yourself if you unexpectedly lose your income.

We understand all the different types of cover available and can assist you with the right insurance for your situation.

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