Mortgages are one of the most expensive regular expenses that most of us might face in our lifetimes. But when we lose a job or run into financial difficulties, mortgage repayments can be difficult to manage. If you have a payment protection insurance policy, you might be wondering whether or not this type of insurance covers mortgage payments in the event of unemployment.
In this article, we answer the question ‘does PPI cover mortgage protection?’ and explain what PPI is. We also look at the other types of executive income protection insurance that may be able to cover your mortgage payments if you become unemployed and can no longer pay your mortgage.
What is payment protection insurance?
Payment protection insurance, or PPI, is a type of insurance that pays out a sum of money to help cover a part of your loan in certain life events. This could be unemployment or redundancy, accidents or sickness that can prevent you from working, critical illness or even death.
Payment protection insurance can be very useful if you are struggling to make repayments on certain loans. However, it’s important to note that there was a scam related to PPI, so you need to make sure that you were not affected. If you have any questions about your PPI insurance, make sure you contact a professional insurance company.
Does PPI cover mortgage protection?
Payment protection insurance typically does cover mortgages. This is classed as a loan that you might not be able to pay if you suffer from a job loss or health issue. However, this will likely depend on the type of PPI you have bought. For example, you can purchase credit card PPI or personal income PPI, which is not likely to cover your mortgage. To find out if your PPI policy covers your mortgage payments, you must first check that you have bought the correct type of protection insurance.
What is mortgage protection insurance?
Mortgage protection insurance, sometimes referred to as MPPI, is a type of payment protection insurance that specifically covers your mortgage repayments. This policy will help to cover your monthly mortgage repayments if you can’t work as a result of illness or you have been made redundant.
This type of insurance will specify a certain number of days that you have to wait before the provider will start paying part of your mortgage. This is usually between 30 and 60 days. However, you may also be able to get the insurance provider to cover some of your bills, which typically means they will cover up to 125% of your mortgage.
Note: you will only receive these payments for a specific amount of time, which may be between a year or two. What’s more, monthly premiums can vary depending on the provider, but are likely to cost between £20-£25 per month.
There are a few different kinds of mortgage protection policies, such as:
Unemployment policies: These cover you if, and only if, you cannot work because you have been made redundant.
Accident and sickness: This type of MPPI only covers your mortgage payments if you cannot work as a result of an accident or illness.
Combined: This type of policy will cover both of the above scenarios, but will also cost you more money.
Do I need mortgage payment protection insurance?
Although this type of insurance is not a requirement, it is certainly something that you should consider. Especially, if you have a large mortgage. You need to have means or savings to be able to afford the mortgage if you were made redundant or you got too sick to work. However, there are a number of other policies you could consider taking out in this scenario:
• Income protection insurance
• Life insurance, which will only cover you if you pass away
• Critical illness cover
Learn more about mortgage protection insurance and income protection
If you have large mortgage repayments and don’t have any other way of paying them off in the event of a redundancy or illness, speak to one of our professional insurance brokers today at WIS Business Protection. We offer expert advice in a whole range of life insurance policies, including relevant life insurance and executive income protection. For more guidance on ‘does PPI cover mortgage protection?’, call us or email us today.