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.

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 qualifies 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.
Click below if you wish to read them: -

• What is Mortgage Payment Protection Insurance?
• What is Mortgage Payment Protection Insurance?
• Is Mortgage Payment Protection Insurance the same as a Mortgage Insurance Guarantee?
• How much will it cost?
• Will Mortgage Payment Protection Insurance pay out immediately you make a claim?
• You want a lump sum if you were to die or become very seriously ill and could not work again. What sort of insurance do you need?
• How much should you insure for?
• How long should you insure for?
• For how long will the policy continue to pay your mortgage?
• Should you insure for accident and sickness or accident, sickness and unemployment?
• Will a claim under a Mortgage Payment Protection policy affect any State benefits to which you may be entitled?
• Do I need mortgage payment protection insurance ?

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