Mortgage Payment Protection

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.

This kind of policy is particularly useful if you are concerned about whether or not you could cope financially in the event that you lost your job through redundancy or are unable to work due to ill health.

Most ASU insurance policies are time limited, so they will only pay out for a set period. This can range from a few months to a couple of years, although if you decide instead to opt for a broader income protection policy, this will continue to pay you a monthly amount until you either recover or until the end of the policy term*. Policies also carry certain restrictions; for example, you may not be covered if you are already at risk of unemployment when you take out a policy.

Most insurers will impose a deferred period. This is the period of time you have to wait before you start receiving benefits from the ASU policy after you have become ill, had an accident or become unemployed. Again, this can vary from having no exclusion period to 30, 60 or 90 days. In some instances, this can be even longer. Generally, the longer the ‘deferred period’ you opt for, the lower the premium.

* Income Protection plans do not provide cover against Redundancy.