Financial Protection for Your Mortgage When You’re Too ill to Work
A recent report estimated that only 1% of UK workers looking to return to work after poor health find a job within six months. Without regular employment, government benefits are often not enough to live on. In this blog, we look at the challenges for homeowners and the types of financial protection for a mortgage when you’re too ill to work.
Government support is not enough
In the Learning and Work Institute report, 20% of people considered as ‘economically inactive’ wanted to work. But there are various factors that have created a benefits trap for those attempting to return to work. This is due to a combination of inflexible employers, inadequate return-to-work support, and skewed financial incentives.
The UK government plans to overhaul working-age health and disability benefit with estimated costs around £100bn a year by the end of the decade. In the meantime, the Learning and Work Institute has proposed a series of improvements to the benefits system that could help bring 500,000 more people back into work over a ten-year period.
However, government support is often insufficient or inflexible for most people, especially if you are a mortgage payer. Without an adequate insurance policy in place, people often struggle financially and lack the tailored support they need to resume employment. Policies such as income protection insurance can provide a much-needed financial buffer.
What does income protection insurance cover?
Income protection policies can be a valuable safety net for anyone who suffers an illness or injury and is unable to return to work quickly. One of the biggest benefits is the ability to pay your mortgage and household bills if the worst did happen.
Income protection works by paying out a regular ‘income’ that can be used to help you support your family, while you are in recovery. It’s different from critical illness insurance – this type of policy only pays out a lump sum benefit for specific illnesses or medical conditions. However, income protection provides financial cover if you’re unable to work due to any illness or injury. But this type of policy doesn’t protect against redundancy.
Mortgage payment protection insurance (MPPI)
Mortgage payment protection insurance (MPPI) is another form of income protection that can help you cover your mortgage repayments. This type of policy offers cover if you can’t work due to involuntary redundancy, as well as illness or injury. As long as it doesn’t exceed 65% of your gross monthly salary, MPPI can cover your full monthly repayments. Most insurers offer support for up to 12 months or until you return to work (whichever is sooner).
Get income protection
Income protection and mortgage protection insurance provides you with financial security and peace of mind when you’re too ill or injured to work. There are different types of policy available, so it’s important find the right option for your situation.
At Bubble Finance Hub, our Insurance Advisers will explain the differences, including all of the benefits, terms and conditions. Our aim is to find income insurance for you or your partner at an affordable cost.
For advice on insurance or mortgages, please get in touch to book an appointment.
As with all insurance policies, conditions and exclusions will apply.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Thank you for reading our blog, Financial Protection for Your Mortgage When You’re Too ill to Work.
Bubble Finance Hub