Mortgage Payment Protection
About Mortgage Payment Protection
Mortgage payment protection insurance covers your monthly mortgage payment if you can't work because of accident, sickness, or unemployment. It pays a set amount straight to you each month, usually for up to 12 months per claim, keeping the mortgage paid while you're not earning.
Mortgage payment protection insurance, often shortened to MPPI, is the only protection policy that pays out for redundancy as well as illness and injury. How a policy behaves at claim time comes down to the type you buy, the definitions it uses, and how long you wait before payments start. Two policies can look almost the same on price and pay very differently.
At Vintage Wealth Management, we advise on mortgage payment protection alongside your life insurance, critical illness cover, and any cover you already hold through work. We recommend across the whole market, match the policy to your mortgage and your situation, and check the small print on how a claim gets paid.
What is mortgage payment protection insurance and how does it work?
Mortgage payment protection insurance pays you a monthly amount to cover your mortgage if accident, sickness, or unemployment stops you working. You take out the policy while you're still working and well. If you later can't work, you make a claim, and the insurer pays you each month until you go back to work or the cover reaches its limit, whichever comes first. The money is paid to you, and it's tax-free.
With MPPI, you make two choices that set the price. One is how long you're willing to wait after you stop working before the payments begin. The other is how many months those payments can last. A longer wait makes the policy cheaper, and if you have sick pay or savings to live on at first, waiting longer is an easy way to lower the cost. The table below explains both choices and how each one changes what you pay.
| Deferred period | Benefit period | |
|---|---|---|
| What it is | The wait between stopping work and your first payment | How many months the payments can last per claim |
| Typical range | 30 to 180 days | 12 months, sometimes up to 24 |
| Effect on your premium | A longer wait lowers your premium | A longer payout raises your premium |
| Good to know | Set it to start when your sick pay or savings run out | The cover ends here even if you're still off work |
Cover comes in three parts, and you can buy them on their own or together. Accident and sickness cover pays out when illness or injury stops you working. Unemployment cover pays out if you're made redundant. Taking all three gives you the widest safety net, and it's the redundancy cover that many other protection policies leave out.
What does mortgage payment protection insurance cover?
Mortgage payment protection insurance covers your mortgage payments when accident, sickness, or losing your job stops you working. It pays out whatever the illness or injury, as long as it keeps you off work past your deferred period. There's no set list of illnesses, unlike a policy such as critical illness cover that only pays out for named conditions.
You pick which risks to cover when you take out the policy. Accident and sickness cover pays your mortgage if illness or injury stops you working, from a back injury to a long recovery after surgery. Unemployment cover pays your mortgage if you're made redundant. Taking all three together is the fullest cover.
Does MPPI cover redundancy?
Yes, as long as your policy includes unemployment cover. It has to be redundancy you didn't choose. You can claim if your employer lets you go, but not if you resign or take voluntary redundancy. There's also a wait of around 60 to 120 days at the start of the policy before you can claim, which stops people buying cover once they already know their job is at risk.
What isn't covered by mortgage payment protection insurance?
Mortgage payment protection insurance won't pay out for a pre-existing condition, voluntary redundancy, resignation, dismissal for misconduct, or a job loss you saw coming. Stress and back problems are often left out, unless the policy sets specific terms for them. The exact exclusions vary between insurers.
| What isn't covered | Why it isn't covered |
|---|---|
| A pre-existing condition you didn't declare | Any illness or injury you already had, or had treatment for, before taking out the policy |
| Voluntary redundancy or resignation | The unemployment cover pays only for redundancy you didn't choose |
| Losing a job you knew was at risk | You can't take out cover once redundancy is already on the cards |
| Being dismissed for misconduct | Cover is for losing your job through no fault of your own |
| Stress or back problems, in many policies | Often excluded unless the policy sets specific terms for them |
| Self-inflicted injury, drug or alcohol misuse | A standard exclusion across every insurer |
Some of these can be worked around with the right policy. A few insurers cover stress and back problems where others leave them out, and the definitions behind each exclusion differ between policies. An adviser who compares that detail is how you avoid a cheaper policy that skips the cover you needed.
Do you need mortgage payment protection insurance?
Mortgage payment protection insurance is for you if your income would stop fast and your savings wouldn't cover the mortgage for long. Ask yourself one thing: if your pay stopped tomorrow, how many months could you keep paying?
Statutory Sick Pay is £116.75 a week for up to 28 weeks, and many employers pay little more. If you're self-employed, you get no sick pay and no redundancy pay. Against a mortgage of a thousand pounds a month, savings run down quickly.
You have most to gain if you're self-employed, have thin sick pay, or have little saved. MPPI is also the only cover that pays out for redundancy, which income protection never does.
You may not need MPPI if your employer pays full sick pay for six months or more, or you have enough saved to cover a long time off work. For a long illness, income protection can be the better option, because MPPI pays for a limited time only.
If you're not sure whether mortgage payment protection insurance is right for you, talk to one of our advisers at Vintage Wealth Management. We'll look at your mortgage, your sick pay, and any cover you already hold, then give you advice with no pressure to take out a policy.
Why work with Vintage Wealth Management.
Why work with Vintage Wealth Management.
Mortgage payment protection is a policy where the wording decides everything. The definition of incapacity, the exclusions on the redundancy cover, and how long you wait before a claim pays all change whether the money arrives when you need it. Reading that detail across the market, rather than taking the first policy offered, is the work we can do for you.
Vintage Wealth Management has advised on protection and financial planning for over a decade. We're named in the FT Adviser UK Top 100 Financial Advisers every year since 2021, our team includes Chartered Financial Planners and Fellows of the Personal Finance Society, and we're authorised and regulated by the Financial Conduct Authority.
We have offices in Central London, North West London, Portsmouth, Buckinghamshire, Swindon, and Dublin, and we work with clients across the UK.
MPPI works best as one part of a wider plan. We look at it alongside your life insurance, critical illness cover, income protection, and the mortgage it's built to cover, along with anything you already hold through work. When you're ready, get in touch with our advisers.
Frequently asked questions about mortgage payment protection
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No. PPI covered repayments on loans and credit cards and was widely mis-sold, which is why it earned its bad name. Mortgage payment protection insurance is a separate product, sold on its own and regulated by the Financial Conduct Authority, that covers your mortgage payments if accident, sickness, or redundancy stops you working.
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Mortgage payment protection covers your monthly payments while you're alive but can't work through illness, injury, or redundancy. Mortgage life insurance pays off the remaining balance if you die. One keeps the payments going for a limited time; the other clears the debt. Many people hold both. You can read more on our life insurance page.
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No. It doesn't clear your mortgage or pay out on death. It covers your monthly payments for a set period, usually up to 12 months per claim, while illness, injury, or redundancy keeps you from working. To pay off the mortgage if you die, you'd need mortgage life insurance instead.
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Yes. A joint policy covers both borrowers on a mortgage, usually by splitting the monthly benefit between you, such as 50/50 or 60/40. If one of you claims, the policy pays that person's share. Where one partner covers the whole repayment, a single policy in their name can be enough.
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Once your mortgage ends, the cover has nothing left to protect, and you'd cancel it. Because MPPI is a rolling monthly policy with no lump sum at the end, you can stop it whenever the mortgage clears, or earlier if your circumstances change and you no longer need it.
Disclaimer
Mortgage payment protection insurance pays a monthly benefit only while the policy is in force and a valid claim is being paid. Cover pays out for a limited period, usually up to 12 months for each claim, and stops at the end of that period whether or not you have returned to work. Cover ends if premiums stop, and no benefit is returned if you never claim. The amount paid, the waiting period, the benefit period, exclusions and terms vary between insurers and depend on factors including your age, health, occupation and lifestyle at the time of application. Failure to disclose relevant information when applying may affect a claim. Premium figures quoted are illustrative and not a quotation. The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied, is given in relation to such information. Vintage Wealth Management or any of its associated representatives shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.