Maximum payout duration of mortgage payment protection?

What is the maximum period of payment with mortgage payment insurance? I have seen that most plans can payout for up to 12 months, are there no plans that pay for longer than this?

Question asked by Tony Hulme
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Answered by Andrew Jenkinson

The vast majority of mortgage payment protection plans can only payout for a maximum of 12 months. There are, however, a very small number of plans that could payout for a maximum duration of 24 months.

Lack of long-term illness protection

The usual limit of 12 months cover is far more of a concern for the accident and sickness section of the plan compared to the unemployment section of the plan.

It is normally the case that another job can be found within a year if someone is made redundant, even if that new job is not as well paid. The point is that you are still fit and healthy enough to work.

However, on the accident and sickness side it is possible that you are too unwell to work for many years for a more serious medical condition. This is something that will be out of your control and therefore only having 12 months protection leaves a great deal of long-term risk.

Are there any alternatives?

Some insurers have introduced long-term mortgage payment protection plans that can payout for a maximum duration of 12 months for redundancy but can payout for the entire length of your mortgage loan for accident and sickness.

On the accident and sickness side, these plans would continue to payout either until you are able to return to work or you reach the end of the policy term, which is usually set equal to the length of your mortgage.

These plans are essentially income protection policies with added unemployment cover. For more information please see the page: Long-Term Mortgage Protection.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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