Income mortgage protection would allow you the peace of mind that if you should lose your income due to suffering illness, accident or you became unemployed you would not be struggling. A policy would allow you to take out insurance for up to a certain amount of your own income. All providers set a limit to this amount so you have to check before taking out the policy.

One of your biggest payments, your mortgage is of course protected with income mortgage protection. Getting behind on this payment is the worst case scenario for any homeowner as the lender could take you to court and you could lose your home to repossession. You would have to be able to come to an agreement with the lender so that you could catch up on the arrears while also at the same time manage to pay your regular payment.

While income protection would allow you to keep up with the repayments of the mortgage it also protects all of your other essential outgoings. If you have loan/credit card repayments to keep up with then you would be able to use the income from the cover. You would also be able to pay monthly bills that keep up the home such as your utility bills along with your monthly food bill.

Income mortgage protection taken with a standalone provider can be taken for a premium that is based on the amount you wish to protect and your age. A policy would begin to provide you with an income between a period of 30 and 90 days with some providers backdating the cover to the first day of you being unemployed or incapacitated. After commencement the cover would continue paying out for a certain length of time defined by the provider. A policy could provide you with an income for either 12 monthly payments or 24 monthly payments and then it would cease. However this is usually more than enough time to have made a recovery and got back to work or to have found another suitable job.

When looking for income mortgage protection you should not get it confused with income protection insurance. Income protection insurance is a type of insurance similar but it does not payout if you should become unemployed. It would payout against accident and sickness and one of the main differences is that it would payout up to the age of retirement if it was necessary. However there is a longer period of deferment before you would be able to put in a claim on the cover. All policies have exclusions within them and these need checking against your circumstances if you are to be sure that you would be able to claim on the cover. Providing you choose an ethical payment protection specialist to take your policy out with you can be sure that you would have a back up plan to fall back against. Policies are a much more reliable option than relying on help from the State or falling back on savings you have accumulated.

There are various insurances to protect your income and you need to know what cover your employment would give you so that you can protect against any shortfall should the need arise. Below we explain what plans there are at what they do.

Mortgage Payment Protection insurance will pay your mortgage if you are made redundant, fall ill or are injured, for one year, sometimes two. Of the 11.7 million current mortgages just 2.3 million are protected by this insurance and seven out of ten of those cost more then 5 pounds per month per 100 pounds of cover and are sold by the lender – if bought independently than can be more competitively priced. A spokesman from mortgage brokers London & Country said, “This is often regarded as expensive cover and the take up is low.”

Payment Protection Insurance (PPI)

Payment Protection insurance is normally specific to a credit agreement, credit card or personal loan mostly with benefits going straight to who is providing the service and therefore, payments should not have any affect on any social security benefits. You are protected if you are made redundant, are injured or too ill to work. This cover usually costs approximately 18 pounds per month for every 100 pounds of monthly cover. For a monthly repayment of 300 pounds the cost of the premium is 54 pounds a month.

If you feel you need this security then it is worth having but you do not have to take it from the lender as it will be expensive, even adding thousands onto your loan. Companies have been mis-selling PPI but Alliance and Leicester have been caught out and fined 7 million for doing it. If you want PPI an independent provider will be more competitive; try britishinsurance.com or paymentcare.co.uk

Short Term Income Protection

Short Term Income Protection is different to the above two. It is paid directly to you and is linked to your income. This means it covers everything, from major outgoings (mortgage) to the gas bill but, it could affect any social security entitlement. Again, it pays out if you are made redundant, you are injured or ill and unable to work and the cover you get is calculated on 75 per cent of your net income or 40 – 60 per cent of your gross income. Some providers cap their monthly pay out at 1,000 pounds but others will pay up to 2,500 per month.

Unemployment Cover

Unemployment cover will pay between 40 and 60 per cent of a gross income in the case of redundancy and can be available as a free-standing policy. Social security payments can be affected again as it would be paid directly to the recipient. If your employer offers good benefits if you are injured or sick it may be worth having this stand-alone policy but it can cost more than a policy that covers for illness and injury too.

Full Income Protection

Full Income Protection can give you a policy that will include unemployment and the cover for injury or sickness is also more comprehensive and generally pays out for longer too. Nevertheless, the unemployment cover is as restricted as it is with any other policy and will only pay out for a maximum of 2 years.

If you have a mortgage hanging over your head then you do need to take into account how you would be able to carry on paying the repayments if you lost your income. While no one likes to think that they might lose their income redundancies can happen. You could also become sick or have an accident that meant you would be unable to work for many months. While you might be able to keep your head above water for a couple of weeks, it would be almost impossible for months. One way of protecting your mortgage and other outgoings is by taking out income insurance mortgage payment protection.

A policy can be taken out with an independent provider and this is the cheapest way of securing against an unknown future. All policies offered by standalone payment protection specialists would have exclusions in them. These are what you need to check to be sure of eligibility. It is essential that you compare them along with cost of the premiums as each provider can put in different exclusions with some being frequently found in all cover. If you then had to make a claim on the policy you could do so after a set amount of time and receive the income you insured against as a tax-free payment.

The terms and conditions of the income insurance mortgage payment protection policy are also where you can find when the cover starts to payout and for how long. Some providers would payout on your policy once you had been unemployed or incapacitated for 30 days, while with others you might have to wait for anything up to the 90th day. How long you would be able to claim would also depend on the provider. Some will payout on the cover for 12 months while other providers might offer a payment each month for 24 months. How much you would payout in premiums each month would be based on the amount of your income you wished to protect and your age. If the policy you take out is based on age, then the younger you are the bigger savings you are able to make.

Income insurance mortgage payment protection should not be confused with income protection insurance. Income protection insurance is a very similar type of policy that can be taken out to protect your mortgage repayments and other outgoings. While this is also a very valuable form of protection the terms and conditions of it are totally different. Therefore you have to decide which form of protection for a lost income would be the most suitable based on your circumstances. Income protection insurance would also supply you with an income if you were to lose your own, however it would do so for a lot longer period than income payment protection. This policy would payout to you for up to retirement age if it was needed. You would have to wait for longer before the benefit would begin though, and there are also many other terms and conditions which would have to be met for you to be eligible to take on the policy.

You are able to cover redundancy with mortgage, loan or income payment protection depending on your needs. All policies can be taken out independently with specialist providers and this is the cheapest way to get a quality product that you are able to fall back on if and when you where to lose your own income.

Income payment protection when taken out to cover redundancy would give you a sum of money that you insured at the time of taking the protection. All payment protection specialists would allow you to insure a certain amount of the income each month. This would affect the premium that you are asked to pay and your age would also be taken into account. This means the younger you are when you protect your income the cheaper the protection would be.

Income cover would allow you the luxury of having an income each month so that you would be able to search for work without having financial worries. You would be able to continue paying your mortgage at the end of the month and so not risk losing your home if you get into arrears that are no longer manageable. If you go into mortgage arrears you would have to make an agreement with the lender to pay off what you owe while also being able to pay your normal payments. As arrears were caused by being unable to pay there would be no chance of making such an agreement. Therefore the lender would have no option but to take you to court and this means repossession would be imminent.

Of course you would also have the money to pay all of your other outgoings which keep you home up and running and your family happy. This would also include having the funds to be able to maintain such as loan repayments or credit card bills when they came around.

You could also cover redundancy and your mortgage on its own with mortgage payment protection. Just insure the repayment you make each month, again up to a set amount and then use this to pay your mortgage lender and avoid arrears. Loan payments could also be kept in check with loan payment protection and this means your credit rating is kept intact. A bad credit rating leads to a refusal in the future by lenders when you want to take out another loan or any kind of credit.

It also takes a lot longer to repair a bad credit rating than it does to get one.

When you cover redundancy with payment protection you would have a deferment period before claiming. This can be between the 30th and 90th days of you being unemployed. Some payment protection providers will backdate the benefit to the first unemployment date before continuing to supply you with an income that would be tax-free. All policies will payout for a pre-determined period of time which is stated in the terms of the policy, this must be checked before you sign. Usually you are able to take out cover which lasts either for 12 monthly payments or 24 monthly payments before it ends.

Mortgage payment protection and income protection are two different concepts which are often confused as one. Policy to safeguard your income will help you cover your salary in case you are out of work due to accident, injury, sickness, disability etc. And you are free to use it any way. It could be for your groceries, kid’s school fees, medical fees and also covers your mortgage loan payments. But a mortgage protection is more specifically used to cover your mortgage payments in case you are out of work due to accident, injury, sickness, disability etc.

A mortgage policy will not necessarily cover your salary. But it is to save your collateral from being confiscated due to non payment of loans. This will help you keep up with your payments on time as your insurance will provide you the dues till you get back to work. You may get an additional 25% cover on the same policy which will help you pay other bills such as mobile bills, electricity bills or utility bills. On the whole the insurance premiums will be based on your loan repayments and not on your salary.

It offers one an advantage to recover while enjoying the benefits of the policies. When you have a policy, you can make use of the mortgage benefits or income benefits you get along with getting time to recover. So that, by the time you get back, things have fallen in place. If there is no policy to protect you, your collateral will be confiscated and you will have no money to cover up your other needs.

It’s likely to feel depressed during this time, with no cash on hand. But a policy will provide you financial succour. Any savings might not last long enough to get you through paying your mortgage and of course you would also need money to live on and pay other outgoings at the same time. Income Protection is designed to pay out a tax free income to replace employed or self employed income which has ceased due to inability to work as a result of illness, injury or disability. It is an insurance against long term incapacity, without any unemployment option.

In short it is known as MPPI. MPPI is similar to unemployment insurance and allows you to protect yourself against redundancy and / or accident and sickness and providing you with a degree of insurance assistance with your mortgage repayments.