Mortgage Protection Insurance

What is Mortgage Protection Insurance?

To answer, what is mortgage protection insurance, mortgage loan protection insurance, also known as mortgage life insurance, or mortgage payment protection insurance (MPPI), is a policy that helps ensure your mortgage payments are covered in case you cannot make them for specific reasons. This can include loss of income due to redundancy (unintentional job loss), illness, or death. With this type of mortgage insurance, you can ensure that you are able to pay the mortgage in case of financial crisis and save yourself from potentially losing your home.

What is the Need for Mortgage Life Insurance?

Mortgage payment protection insurance might be the right option for you if being out of work would make it difficult to meet your mortgage repayments or if you’re self-employed and not eligible for sickness or redundancy pay.

Mortgage life insurance, or mortgage loan insurance, is a safeguard if you can no longer afford your monthly repayments. It can save you from defaulting on your mortgage and possibly losing your home. Alternatively, you could consider general income protection insurance, which offers flexibility in payouts for accidents or illnesses but does not cover redundancy and is usually more expensive than MPPI.

How Does Mortgage Loan Protection Insurance Work?

Mortgage payment protection insurance offers cover if you’re unable to work for a reason covered by your mortgage insurance. The payout depends on the type of mortgage loan protection insurance you choose (like mortgage disability insurance, mortgage insurance for job loss, mortgage term insurance, or mortgage protection insurance for seniors) and how much you’d like your policy to pay out each month. You can cover just the cost of mortgage life insurance, or add an extra 25% for bills and other expenses. The maximum monthly benefit is usually capped at a set monthly limit (often around £2,000-£3,000) or a percentage of your gross monthly income (typically 65-75%). If your claim is successful, you’ll have to wait 30-180 days for a pay-out, known as the ‘deferred period,’ though some providers offer ‘back to day one’ cover, which backdates payments to the date of the claim.

What is the Best Mortgage Protection Insurance in the UK?

Here are some of the best mortgage protection insurance companies offering mortgage loan protection insurance plans in the UK:

Note: You can use the term insurance for NRI premium calculator to check the premiums applicable for your mortgage term insurance for NRI policy from India.

What Does the Mortgage Loan Protection Insurance Cover?

You can opt for any of the following mortgage life insurance cover as per your specific needs:

• Accident and Sickness: This plan will cover your mortgage repayments if you cannot work anymore due to a critical illness or a serious injury. 

• Unemployment: If you cannot pay your mortgage due to unemployment or a job loss, this term insurance plan will pay your mortgage payments.

• Accident, Sickness, and Unemployment: This will cover you if you cannot repay your mortgage due to sickness, accident, or unemployment.

Mortgage payment protection insurance is also available for self-employed, contract workers, and salaried individuals. However, some T&Cs may apply.

What is Mortgage Disability Insurance?

Mortgage Disability Insurance ensures your mortgage repayments continue if you’re unable to work due to an illness or injury. Unlike standard mortgage insurance, which covers the loan in case of death, this policy focuses on income loss caused by temporary or permanent disability. It provides monthly payments that cover your mortgage during your recovery period, helping you avoid missed payments and the risk of losing your home. This mortgage disability insurance India is ideal for homeowners who rely on their income to manage large financial commitments, like mortgage payments, and want peace of mind during uncertain times.

What is Not Covered in Mortgage Protection Insurance?

Exclusions in mortgage loan protection insurance typically include:

• Voluntary job loss or redundancy

• Prior knowledge of potential redundancy

• Getting fired from your job

• Pre-existing medical conditions

• Certain stress or back-related issues, unless they meet specific criteria

• Self-inflicted injuries

• Unemployment claims for self-employed individuals

You should review the policy terms carefully to understand coverage and exclusions before buying a mortgage payment protection insurance.

How Much Does Mortgage Protection Insurance Cost?

To answer, how much does mortgage protection insurance cost, the cost of mortgage life insurance depends on several factors, including:

• Your Salary or Annual Income: Individuals with higher household incomes may have to pay higher premiums.

• The Size of Your Mortgage Repayments: If your mortgage repayment amount is large, it can increase the cost.

• The Type of Policy You Take Out: Different coverage levels and options affect the mortgage protection insurance average cost.

• How Soon You Want to Be Covered: Mortgage life insurance with shorter waiting periods before coverage starts may be more expensive.

How Much is Mortgage Protection Insurance UK?

The cost of mortgage protection insurance in the UK varies depending on several personal and policy-related factors. Your age, occupation, income, and the size of your mortgage repayments all influence the premium. For instance, individuals working in physically demanding jobs, such as manual labourers, may face higher premiums due to a greater risk of injury compared to those in office-based roles. 

The type of mortgage insurance and the level of cover you choose also play a key role. Covering 125% of your mortgage payments, instead of just 100%, to include other household expenses like bills, will naturally increase the cost. Additionally, how quickly you want the mortgage payment protection insurance to start paying out after a claim, and the duration for which you want to be covered, will also affect the overall price. Each of these factors is considered to tailor the mortgage loan protection insurance policy to your specific needs, making the cost of mortgage protection insurance unique to every individual.

How Can I Get the Cost of Mortgage Protection Insurance?

To get a mortgage protection life insurance quote, you’ll need to provide the following details:

• Personal Information: Your name, address, and date of birth

• Annual Income: Your annual earnings

• Monthly Mortgage Payments: The amount you pay for your mortgage each month

• Waiting Period: The maximum amount of time you can afford to wait before receiving the benefit

• Employment Details: Information about your job and employment status.

What is Mortgage Protection Insurance vs Life Insurance?

How Can I Lower the Cost of Mortgage Life Insurance?

The following factors can help you lower your mortgage protection premium:

• Employer’s Sick Pay: If your employer offers a generous sick pay scheme, you may be able to opt for a longer deferred period before benefits start, reducing your premium.

• Savings: Substantial savings can temporarily cover mortgage payments, enable you to choose a longer waiting period, and lower your insurance cost.

• Existing Life Insurance: If your life insurance includes critical illness coverage, it might already provide mortgage protection insurance with critical illness cover, potentially reducing the need for additional coverage.

• Comparing mortgage insurance cost: The mortgage protection insurance average cost vary among providers, so comparing quotes from different insurers can help you find the most cost-effective option.

How to Choose the Right Mortgage Protection Insurance?

• Assess Your Needs:

  Determine what type of mortgage loan protection insurance you need based on your financial situation, health, and employment stability. Consider whether you need mortgage life insurance, critical illness coverage, or income protection insurance plans.

• Compare Policies:

  Compare different types of life and mortgage insurance policies from various insurers. Look at the coverage options, exclusions, mortgage insurance cost, and the insurer’s reputation.

• Read the Fine Print:

  Ensure you understand the policy's terms and conditions, including what is covered, any exclusions, and the claims process.

• Seek Professional Advice:

  Consult with a financial advisor or insurance broker to help you navigate the options and find the best mortgage protection insurance for your needs.

• Review Your Policy Regularly:

  As your life circumstances change, review and update your mortgage loan protection insurance to ensure it continues to meet your needs.

Alternative Ways to Get Mortgage Loan Protection Insurance UK

Mortgage payment protection insurance is just one way to secure your home if life takes an unexpected turn. But it’s not the only option. Here are some life and mortgage insurance alternatives that might suit your personal or financial situation better:

Mortgage Life Insurance

This type of insurance pays out a lump sum if you pass away during the term of the policy. It’s often structured as decreasing term insurance, which means the payout reduces over time, just like your mortgage balance. The life insurance on mortgage loan is a cost-effective option if your concern is primary mortgage insurance repayment in case of death.

Critical Illness Cover

Critical illness cover pays out if you’re diagnosed with a serious medical condition listed in the policy. This lump sum can be used to clear your mortgage, pay for medical treatments, or manage everyday expenses. Illnesses covered typically include cancer, heart attacks, and strokes, though this varies between the best mortgage protection insurance companies.

Income Protection Insurance

Unlike mortgage payment protection insurance, which is focused solely on covering mortgage payments, income protection provides a replacement income if you’re unable to work due to illness or injury. It can cover both short- and long-term periods and helps manage your overall cost of living, including bills, childcare, and food.

Term Insurance for NRIs (Non-Resident Indians)

If you're an NRI with property or financial responsibilities in the UK or India, term insurance for NRI can be a simple, affordable way to protect your family from financial strain in your absence. While it may not be marketed specifically as mortgage cover, term insurance can serve the same purpose, and more.

Benefits of Buying Term Insurance for NRIs from India

• Family can use the benefit amount to pay off the remaining protection insurance mortgage amount

• You can claim a term insurance GST waiver of 18% on the premiums paid and a 5% additional discount on the annual mode

• Get tax-free claims on the term insurance payout for the family and choose to receive a refund of premiums on outliving the policy tenure.

• NRIs in the UK can apply for term insurance for NRI without a permanent residency

• Mortgage term insurance for NRI provides global cover with same T&Cs with a pre-approved sum assured

• Choose to delay the premium payments with the premium holiday feature and receive immediate claim payouts on claim intimation by your nominees

• The tele/video medical facility in term insurance allows you to clear your medicals online without visiting India

How to Buy Term Insurance for NRI in the UK from India?

Here is how you can buy mortgage term insurance for NRIs in the UK from Indian insurers to receive mortgage life insurance.

Step 1: Visit the term insurance for NRI page of Policybazaar

Step 2: Fill in your name, gender, and contact information

Step 3: Select the right smoking habits, educational qualifications, occupation types, and annual income

Step 4: Choose the best mortgage protection insurance for NRI and proceed to pay

Wrapping it Up!

Mortgage payment protection insurance is a crucial safety net for homeowners in the UK, providing financial security and peace of mind. By understanding the different types of MPI and carefully selecting the right policy, you can protect your home and ensure that you and your family are safeguarded against unexpected financial challenges. Whether it's through mortgage life insurance, critical illness cover, or income protection, MPI can be an integral part of a comprehensive financial plan.