Very few people feel prepared to deal with life's surprises, and when the worst happens you want to feel like you've got the means to keep up with your financial commitments.
If you can foresee problems, you could take out mortgage payment protection insurance (MPPI) or income protection insurance to cover your mortgage repayments for a specific period.
What is MPPI?
MPPI is a type of insurance that covers your mortgage payments if you can't pay them because of an accident, unemployment and/or illness.
You can get covered for all thee incidencies (which will cost more) or you can opt for an accident and illness-only policies or an unemployment-only policy.
How much does MPPI cost?
It depends on your age and how much your mortgage repayments cost. Your insurer will pay out an agreed amount, which is usually up to 50% of your monthly salary for up to two years.
Insurers will have different options for when you can claim, usually between 30-180 days of "off work" time to pass. The longer the time that passes, the cheaper the price of your insurance. Some insurers have a policy about how long you've been a customer before you can claim, so make sure you pay attention to this detail.
What is income protection?
Income protection is slightly different in that the money you get can be used for all bills, not just your mortgage. It pays out around 50% of your monthly salary and can last longer than MPPI, for instance, until you can go back to work or until you reach retirement.
Income protection doesn't tend to offer any cover for redundancy, however some insurers will offer this as an option but you'll have to pay more for it.