does mortgage protection insurance cover job loss?

Types of Mortgage Protection Insurance

Accident, Sickness, and Unemployment (ASU) Cover:

• • What It Covers: This type of policy provides cover if you are unable to work due to an accident, illness, or involuntary unemployment (such as redundancy). It is the most comprehensive form of mortgage protection insurance and includes job loss coverage.
  • How It Works: If you lose your job through no fault of your own, the policy will pay out a monthly benefit, typically equal to your mortgage payments, for a specified period (usually up to 12 or 24 months) while you seek new employment.

Accident and Sickness Cover:

• • What It Covers: This type of policy provides cover only if you are unable to work due to an accident or illness. It does not cover unemployment or redundancy.
  • How It Works: Payments are made to cover your mortgage if you are unable to work due to health-related issues, but you would not be covered if you lost your job.

Unemployment-Only Cover:

• • What It Covers: This type of policy specifically covers you if you lose your job due to redundancy.
  • How It Works: It pays out a monthly benefit to cover your mortgage payments for a limited time (again, typically up to 12 or 24 months) if you are made redundant.

Policy Limitations and Exclusions

• Waiting Periods: Most mortgage protection policies have a waiting or exclusion period, often 30 to 90 days, before you can make a claim for job loss. This means you won’t receive any benefits immediately after losing your job.
• Eligibility Criteria: To be eligible for unemployment cover, you usually need to have been in continuous employment for a certain period before the policy start date (commonly 6 to 12 months). Self-employed individuals or those on fixed-term contracts may find it harder to get this cover.
• Exclusions: Policies may exclude claims for job loss if you were aware of potential redundancy at the time of taking out the policy, or if the job loss is voluntary (e.g., if you resign).

Costs and Considerations

• Premiums: Adding unemployment cover to your mortgage protection insurance typically increases the cost of the premiums. However, this could provide peace of mind if you are concerned about job security.
• Duration of Payout: Most policies limit the duration of unemployment benefits, usually to a maximum of 12 to 24 months. This is intended to provide temporary relief while you find new employment.

Conclusion