Joint Mortgage Payment Protection Insurance
Joint Mortgage Payment Protection Insurance (MPPI) can cover short-term illness, injury or unemployment.
What Does it Cover?
This type of policy will pay out a monthly benefit to cover the monthly mortgage payments. The maximum amount that you can cover is the full loan payment plus up to an additional 25% that can be put towards associated home costs, such as council tax and utility bills.
In some cases, however, it is possible to cover only the incapacitated partner’s contribution if you would prefer to save money on your policy.
For example, if both partners have equal income then it can be structured so that the insurance policy would pay out 50% of the loan amount each month if a claim needs to be made, which would make the monthly premiums cheaper.
How Long Can I Claim?
Joint Mortgage Payment Protection policies are designed to provide only short term protection for your mortgage payments. The maximum length of time a claim will pay out is either 12 months or 24 months, whichever you choose at the start of the plan. However, this period will only commence after your policy’s Deferred / Excess Period, which is usually set at a minimum of 30 days.
During this time, you will also be subject to assessments to assess your incapacity. Your insurer will use a predetermined definition of incapacity to decide whether or not your health problem is severe enough to prevent you from working.
Joint Mortgage Unemployment Insurance
If you choose to add Unemployment Cover to your policy, it’s important that you research carefully when you are and are not entitled to your benefits. Unemployment Cover can only be claimed under specific circumstances, in general when you have lost your job through no fault of your own.
Typically, instances of unemployment that are not covered by Joint Mortgage PPI include:
- You are self-employed or working part-time;
- You were voluntarily made unemployed or have taken a career break (other than to care for a sick dependent);
- You were aware of and given warning that you may be made redundant when you took out your policy;
- You were made unemployed as a result of misconduct, dishonesty or fraud;
- Your redundancy came about as the result of industrial action.
It is also important that you are aware that having an MPPI policy may prevent you from receiving certain government benefits if you are in need of an alternative source of income.
Joint Mortgage Payment Protection vs Income Protection
While Joint Mortgage Payment Protection protects your monthly mortgage payments, the amount that you get from your monthly payouts can’t cover much else. This means that you will have to find another way to meet your other essential expenses.
If this is something you worry about, Income Protection Insurance is often seen as a more comprehensive alternative to Mortgage Payment Protection.
While you can’t get joint Income Protection for couples – each person would need to have an individual policy – it’s possible to cover more than just your mortgage, including other daily living expenses.
You can typically cover up to 65% of your gross individual pre-incapacity income rather than just covering mortgage repayments, which makes it a favourable option for many people.