Insurance

Accident Sickness & Unemployment

What is it?

A policy that is designed to provide a level of assistance with mortgage and associated repayments if the insured person is unable to work thought illness, injury or involuntary unemployment (redundancy).

The monthly benefit payments under the Mortgage Payment Protection Insurance policy are paid out up to a maximum period of benefit which is usually either 12 months or 24 months.

Why do you need it?

Many people make the mistake of thinking that should they fall ill, have an accident or lose the ability to work, the State will step in and sort it all out. Wrong - the rules governing sickness benefit claims have changed dramatically.

Before April 1995, you could qualify for long-term sickness benefit if you were rendered incapable, by illness or disability, of doing your own job/type of work. Now the rules state that you will only qualify for long-term sickness benefit if you cannot do any type of work.

In other words, only if you are completely incapacitated will the State provide assistance. This means that, to all intents and purposes, there are currently no long-term sickness benefits in the UK.

Even if you do succeed in getting long-term sickness benefit from the State - it’s currently only £66.15 a week – and that benefit is now taxed. State benefits will usually only assist with the interest part of any mortgage payment and then be limited to mortgages up to £100,000. It is also not available for the first nine months for those mortgages taken out after October 1995.

Longer periods of cover would be available under an Income Protection policy.