Will a claim under a Mortgage Payment Protection policy affect any State benefits to which you may be entitled?

No. Whilst you are using Mortgage Payment Protection Insurance to replace your income and meet your monthly mortgage repayments, insurance payouts do not qualify as income in the eyes of the Benefits Agency or the Inland Revenue.

All insurance payments are tax-free.

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Is Mortgage Payment Protection Insurance the same as a Mortgage Insurance Guarantee?
No. Mortgage Payment Protection Insurance is totally different to a Mortgage Insurance Guarantee.
How much should you insure for?
The rate you pay is charged per Ł100 of income you need. So, you should insure for the next Ł100 above the cost of your monthly mortgage repayment.
What is Mortgage Life Insurance?
Mortgage Life Insurance is sometimes called Mortgage Protection Insurance.
Should I include Terminal Illness Insurance?
Terminal Illness Insurance is generally included at no extra cost on all Mortgage Life, Life and Critical Illness policies.
One of the main reasons for purchasing Mortgage Payment Protection Insurance is the long-term trend of the reduction in state benefits. Did you know that, if you become ill, suffer a serious injury, or are unemployed, it’s nine months before you can qualify for state help with your mortgage repayments and then, for your claim to be valid, you must first qualify for income support. Then, even if you do qualify, there is a chance that you won’t receive the full amount of your mortgage repayment.

As a result of this, the government is trying to work with the Council of Mortgage Lenders to encourage all people to take out Mortgage Payment Protection Insurance for those first nine months when they wouldn’t be able to claim benefits.

And if you are one of the “lucky” ones who qualafies for a state payout, basic sick pay and Incapacity Benefit will provide around £65 a week for the first year and £72 a week thereafter. Could you make ends meet with that?

Frequently Asked Questions related to the above topic.
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