Mortgage Payment Protection, what is it?
A Mortgage Payment Protection plan is designed to ensure that you are able to continue to make your mortgage (and other related expenditure) payments in the event of accident, sickness or unemployment. It is often referred to as Accident, Sickness and Unemployment cover or ASU. These plans usually pay benefits for up to two years however, if you are seeking a plan that pays for a longer period, then Income Protection Insurance is generally more suitable.
It’s worth noting that there is currently no legal requirement to have such cover and potential mis-selling of these products has generated much interest from the media and the industry regulator in recent years. However, this doesn’t mean that they are not right for some people and can provide valuable protection in the right circumstances.
Who is it for?
This type of plan is designed for those who are worried about being able to continue their mortgage payments in the event of losing income due to accident, sickness or unemployment.
It is extremely important that you take independent financial advice before taking out this type of plan as they are not always the best nor cheapest option.
Accident Sickness and Unemployment
Accident Sickness and Unemployment insurance is the only policy that covers you against losing your income through redundancy.
In the current climate of job uncertainty, knowing that you'll be able to keep up to date with your bills in the event of redundancy is one less thing to worry about, and having that peace of mind knowing that your family’s welfare and lifestyle can be maintained if you become unemployed due to job cuts, or simply through ill-health can be a weight of one's mind.
So what does ASU insurance provide me?
ASU insurance is a time-limited insurance product that provides short term assistance in paying your debts, in the event that you are temporarily unable to work.
ASU cover usually starts a month after you stop work, and pays out for a limited period of 12 or 24 months, depending on the policy. Come to us and we'll search through our panel of lenders to find the best ASU policy that’s right for you.
When considering ASU insurance, reading the small print is essential, as there are important differences between the various policies available. It is particularly important to check which health conditions are covered by each policy, and if you have had a particular health issue in the past, to make sure that is included, or, more importantly, that it is not excluded for you.
If you are in full time employment or self-employment you should consider the benefits of a redundancy cover plan. We are all vulnerable to the potential of involuntary redundancy and having 'a job for life' is no more. For your own peace of mind consider how to minimise the possible financial impact of such an important event.
How can you protect yourself against involuntary unemployment?
Well you can buy peace of mind when you take out an unemployment protection plan. Part of the payment protection insurance - PPI - family, redundancy cover provides a tax free monthly amount that can be used to help you manage financially in the event of involuntary unemployment.
Once you are made involuntarily unemployed, the policy will begin to pay out after a set period of time, and whilst this can vary among different providers it is typically from 30 to 90 days after redundancy.
What income level can you expect?
A typical plan will allow you to insure up to 50% of your monthly gross earned income, or up to £1,500 - whichever amount is the lesser, and when you compare this to whatever you may receive from the State, (not everyone is eligible for financial assistance from the Government if they are made unemployed), you'll appreciate how valuable this type of cover can be.
How long will the cover pay out for?
This varies from provider to provider but most policies will pay out for up to 12- 24 months, or until you get back to work - whichever event is sooner, giving you peace of mind in knowing that you are still receiving an income even when yours has ceased.
Why it's important to consider a policy
We've already mentioned that getting help from the State can be difficult and there are eligibility hurdles to jump. If, for example, you were unemployed and had mortgage commitments to meet, even if the State were to contribute towards your mortgage, it would only cover the interest part of the repayments.
Unemployment cover can be quite affordable and can cost from just a few pounds every month for every £100 worth of protection required. We can advise you on appropriate providers for your needs. This type of policy gives you financial breathing space at an already difficult time.
Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income