Mortgage Protection Insurance

Q: Is mortgage protection the same as life insurance?

No, mortgage protection isn’t the same as life insurance . Life insurance is a type of cover that pays out a lump sum to your beneficiaries upon your death. However, it doesn’t cover redundancy and, unless you add critical illness cover to your policy, it won’t pay out if you were to become unwell. Related guide: Do you need life insurance to get a mortgage?

Home Insurance Mortgage Protection

For many borrowers, mortgage repayments will often be your largest monthly outgoing. But, have you ever considered what would happen if you suddenly found yourself unable to meet these repayments as a result of poor health or redundancy?

Defaulting on your mortgage can have serious consequences; in the worst-case scenario, your property could even be repossessed. Fortunately, mortgage payment protection could provide some peace of mind should the unexpected happen.

Featured Mortgage Protection Providers

Last updated: 08/11/2024

Mortgage Advice Bureau
Mortgage Advice Bureau is the UK's leading mortgage intermediary brand, winning over 200 national awards for the quality of its advice and service.

There are no fees or costs for its advice or for setting up cover.

Your cover can be placed in trust for free.

Life Insurance is offered from £8* per month, Critical Illness Cover from £9* per month and Income Protection from £10* per month

It provides a panel of insurers, meaning it's not tied to one company.

^{*Subject to age, smoking and medical disclosures.}
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Note

Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfactscompare.co.uk will receive a small payment either if you click the links or if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions.

Disclaimer

The list of mortgage protection providers on this page is a selection of services available and gives you an idea of the kind of options available. You can find out more about the individual products by visiting any of the providers listed. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfactscompare.co.uk will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfactscompare.co.uk recommends you obtain independent financial advice.

What is mortgage protection insurance?

Mortgage payment protection insurance (MPPI) is a type of insurance policy that covers the cost of your mortgage repayments should you become unable to meet them yourself due to ill-health or unemployment.

In most cases, an insurance provider will pay out a set amount each month for up to a year or until you return to work – whichever comes first.

This amount can cover your monthly mortgage repayments in full so long as they don’t exceed 65% of your gross annual salary. With some policies, you may even be able to receive up to 125% of your mortgage costs and use additional funds to pay for household bills.

However, if a larger portion of your salary is spent paying for your mortgage, an insurance provider will typically make a partial contribution to your repayments each month.

What does mortgage protection cover?

There are three levels of mortgage protection cover to choose from which each cater for different circumstances:

Accident and sickness: covers your mortgage repayments if you were to become incapacitated by a long-term illness or serious injury.
Unemployment: provides cover if you were to be made redundant from your job.
Accident, sickness and unemployment: offers comprehensive cover, whether you were to suffer a serious health problem or lose your job.

What isn’t covered by mortgage protection?

It should be noted there are some conditions and circumstances mortgage protection insurance usually won’t cover.

Pre-existing medical conditions, self-inflicted injuries and certain stress or back-related injuries (unless they meet a strict set of criteria) are commonly excluded.

Similarly, you usually can’t claim on your mortgage protection policy in the event of voluntary redundancy, prior knowledge of potential redundancy and getting sacked.

Meanwhile, if you’re self-employed, you may find you’re unable to claim for unemployment at all.

Is mortgage protection the same as income protection?

While mortgage protection is a form of income protection, these two types of insurance policies are not the same.

The main difference is income protection provides more expansive coverage if you were unable to work as a result of ill health or injury.

Unlike mortgage protection insurance, which is primarily used to cover the cost of mortgage repayments, income protection insurance pays out a regular amount each month which can be put towards a wider range of expenses, such as rental payments, credit repayments and other household bills.

When can you claim mortgage protection?

When it comes to claiming on your mortgage protection policy, you’ll usually need to be off work for a specified number of days before receiving a payout.

Known as the ‘deferred period’, this timeframe typically ranges anywhere between 30 and 180 days. Although those with a longer deferred period will often be cheaper, it’s important to evaluate how long you could feasibly afford to wait before committing to a policy.

This may depend on your sick pay entitlement as well as how much you hold in savings.

Do you need mortgage payment protection?

While not mandatory, you may want to consider mortgage protection insurance if you have any concerns about your ability to meet mortgage repayments were you to be made redundant or suffer a serious health problem.

Alternatively, there are other types of protection you could consider:

Find out about other types of protection:

Income protection

Critical illness cover

Life insurance

How to lower the cost of mortgage protection insurance

If you’re interested in mortgage protection insurance but are concerned about the added expense, there are a number of ways to keep your premiums down.

First and foremost, consider what resources are already at your disposal if you were suddenly unable to work. For instance, does your employer offer a sick pay scheme or do you have an emergency fund that could cover your mortgage repayments in the short-term? If so, this means you could potentially opt for a cheaper policy that has a longer deferred period.

Meanwhile, if you hold a pre-existing life insurance policy, be sure to check whether it contains critical illness cover; it pays out if you’re diagnosed with any of the conditions included in the policy and could eliminate the need for a more comprehensive (and therefore more expensive) mortgage protection plan.

However, as always when comparing insurance quotes, bear in mind the cheapest mortgage protection policy may not necessarily be the best suited to your needs, nor the most cost-effective in the long run. Remember, you can always adjust your level of cover in the future should circumstances change – in fact, it’s good practice to review your insurance policies regularly.

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

Speak to an award-winning mortgage broker today

MAB is the preferred mortgage broker of Moneyfactscompare.co.uk

_{Get friendly, expert advice free of charge as a visitor of Moneyfactscompare.co.uk}

_{Mortgage Advice Bureau have 1,600 UK advisers with 200 awards between them.}

Speak to an award-winning mortgage broker today.

Call 0808 149 9177 or request a callback

_{Mortgage Advice Bureau offers fee free mortgage advice for MoneyfactsCompare visitors that call on 0808 149 9177. If you contact Mortgage Advice Bureau outside of these channels you may incur a fee of up to 1%. Lines are open Monday to Friday 8am to 8pm and Saturday 9am to 1pm excluding bank holidays. Calls may be recorded.}

_{Your home may be repossessed if you do not keep up repayments on your mortgage.}

Mortgage Protection FAQs

Is mortgage protection the same as life insurance?

No, mortgage protection isn’t the same as life insurance.

Life insurance is a type of cover that pays out a lump sum to your beneficiaries upon your death. However, it doesn’t cover redundancy and, unless you add critical illness cover to your policy, it won’t pay out if you were to become unwell.

Is mortgage protection the same as critical illness cover?

No, mortgage protection isn’t the same as critical illness cover.

Critical illness cover is a type of insurance that provides a tax-free payout should you be diagnosed with any illness listed in your policy (which can include certain types of cancers, heart attacks and kidney failure).

Unlike mortgage protection, this payout can be used to cover other expenses – not just your mortgage repayments.

Before looking into options for critical illness cover, be sure to check whether this is already covered as part of your life insurance policy.

Is mortgage protection the same as payment protection insurance?

No, mortgage protection isn’t the same as payment protection insurance.

Payment protection insurance (PPI) is another type of income protection that covers the cost of monthly debt repayments for products such as credit cards and loans.

While the claimant will receive the payout from their mortgage protection policy, PPI is paid direct to the lender.

What’s the difference between mortgage protection and mortgage life insurance?

Mortgage protection differs from mortgage life insurance in that it pays out a set amount each month to cover the cost of mortgage repayments if you were to lose your job or suffer a serious health problem.

By contrast, mortgage life insurance is usually paid out as a lump sum when you die and can be used by your dependants to pay off any remaining mortgage debt. This type of policy is also sometimes referred to as ‘decreasing life insurance’ because, if you have a repayment mortgage, the amount paid out will steadily reduce as your debt lessens over time.

However, if yours is an interest-only mortgage, you’ll need a level term insurance policy instead. This is as your repayments only cover the interest accrued and don’t reduce your overall debt.

Does mortgage protection cover pre-existing medical conditions?

When buying mortgage protection insurance with a pre-existing medical condition, be sure to carefully check policies for any exclusions.

This is because some won’t cover pre-existing conditions, while others may provide cover subject to a strict set of criteria. For instance, you may be unable to make a claim if a pre-existing condition were to recur within a given period of taking out the policy.

Does your job affect your mortgage protection policy?

Yes, your job may affect how much you pay for mortgage protection, as this is taken into consideration when calculating the cost of your premiums (alongside age, annual income and monthly mortgage repayments).

Those in occupations which present a higher risk of injury (such as manual labourers) may find their premiums are more expensive compared to those in lower-risk lines of work.

Can you get mortgage protection if you’re self-employed?

Yes, you can get mortgage protection if you’re self-employed.

In fact, this type of insurance may be particularly attractive to self-employed individuals who lack access to employee benefits such as sick pay and are concerned about their ability to meet mortgage repayments if they were to become ill or injured.

However, it should be noted some insurers will impose restrictions on the level or coverage self-employed people can receive; many, for instance, won’t accept claims for unemployment if you’re self-employed.

Therefore, it’s important to carefully check the terms of a policy before taking out the insurance.

Can you cancel mortgage protection?

Yes – most mortgage protection policies come with a 30-day cancellation period (also known as a ‘cooling off period’) unless the term is for less than six months or if you bought the insurance face-to-face from a broker.

If you change your mind during this period, you can typically cancel the policy and receive a refund of any premiums paid. However, you may still be charged if you’ve been covered for a certain number of days or if you’ve made a claim on the policy before cancelling.

Outside of the cooling off period, there’s no automatic right to cancellation, so you may find yourself locked into your mortgage protection policy for the duration of the contract. While some insurers may allow you to walk away from the contract, they’re within their rights to charge cancellation fees and they may not refund any premiums paid.

If you’re considering cancelling your mortgage protection policy, it may therefore be worth speaking to your insurance provider to see what options are available.

Ella Mower

Senior Content Writer

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Mortgage protection insurance