What would happen if you were unable to work?

Buying a home is probably the largest financial commitment you are likely to make. If you’re worried about what would happen if you were unable to work and couldn’t meet your monthly mortgage repayments, due to unemployment or an unexpected accident or illness – you can protect yourself against these events with a payment protection (or ASU) policy.

 

Cover types available

- Accident, Sickness and Unemployment
- Accident and Sickness Only
- Unemployment Only

Becoming unemployed can cause many problems, not least the fact that there simply may not be any money to pay the bills. Most people will agree that their home is their most important material possession, yet if mortgage payments cannot be made, the security of a home can be taken away.

You cannot rely on state help to cover your mortgage payments if you cannot work. There is no help for the first nine months of unemployment or disability for mortgages taken since October 1995. Existing borrowers only qualify for benefit if they qualify for Income Support.

You can buy cover to protect your mortgage payments if you have an accident or become ill and cannot work, if you become unemployed, or to provide full cover for accidents, sickness and unemployment.

The Benefit period is the length of time you can claim monthly payments for, and these vary for each policy. You can select the time period you want to be covered (1 year, 2 years etc) but the longer you want the cover for, the higher the premiums will be.

There is always an Initial Exclusion period at the start of the contract, during which time no claim can be made. This normally applies to unemployment only and is 30, 60 days or longer. Most policies also have an excess period, for each and every claim. An amount of days 30, 60 or more which are excluded from the claims payment.

Alternatively some have a waiting period after which time the claim is paid in full. With a 30 day waiting period, on the 31st day of unemployment or disability the claim is back dated to day 1 and paid in full.

Most providers will cover your mortgage payment and a little extra for mortgage related bills, such as pensions, insurances etc. They usually offer an extra 5, 10 or even 25 per cent but may have conditions on what this money can be used for.