img
img
MyMoneyHelp home
Sign up for our newsletter!
Name:
Email:

corner cor cor
cor
MyMoneyHelp
Credit Reports
Personal Loans
Mortgages
Insurance
Debt Help
Credit Cards
Banking
Education Center
cor
cor cor co
corner cor cor
cor
Education Center
Banking
Credit Cards
Credit Reports
Debt Help
Insurance
Mortgages
Personal Loans
Glossary
cor
cor cor co
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income protection or mortgage protection
Income Protection or Mortgage Protection?
Which Will Give You the Best Coverage?

When we reach that certain ‘age’ where we settle down, buy our own home, and maybe even start a family, we all become more aware of how fragile our financial situation may actually be. At this stage, many people look to take out certain types of insurance policies to protect them if anything goes wrong.  So you may, for example, take out a life insurance policy or an income protection insurance or mortgage protection insurance option.

Choosing to have life insurance is a bit of a no-brainer, but making the choice between income protection or mortgage protection can be a bit harder. Here, we take a look at some of the differences between income protection insurance and mortgage protection insurance and which one might be better suited to you.

What is income protection insurance?

An income protection insurance policy gives you insurance coverage in the event that you fall ill or get injured and cannot work. This kind of coverage will pay you a certain percentage of your income (as long as you qualify for payment of course) if illness or injury/accident prevent you from doing your job for a long period of time.

The advantage of income protection insurance is that income protection will kick in when your employer is legally allowed to stop paying your salary. You can use this money to pay for whatever you want, but in most cases, it will go towards paying off the mortgage, any financial commitments you already have, and your everyday living costs. You won’t get as much as you would from your salary, but your expenses will probably be lower as you won’t have work costs to factor into your budget. This kind of protection, once started, can be set up to last for as long as you cannot work or until you retire (whichever comes along fastest).

What is mortgage protection insurance?

When comparing mortgage protection insurance to income protection insurance you’ll soon see that mortgage protection insurance does have some differences to income protection insurance. Mortgage protection is specifically set up to cover your mortgage payments in the event that you are too ill to work, have an accident that prevents you working, or lose your job.

So, you won’t get financial help for other bills, but you will be able to pay off your mortgage. Unlike income protection plans, this kind of coverage won’t last forever; it is usually paid out for a fixed term, i.e. for 12 or 24 months, until you get back on your feet again.

Which insurance option will suit you best?

The decision between income protection or mortgage protection will generally depend on your personal circumstances. For example, you may find that income protection insurance suits you best if:

  • You are the primary breadwinner and there is no other significant household income.

  • You do not think that your family could cope financially without a regular income.

On the other hand mortgage protection insurance may suit you best if:

  • You are a two salary household and your partner could cover living costs as long as the mortgage payments are sorted elsewhere.

  • You don’t have any worries about how your family would cope financially so long as the mortgage payments are made.

Some people do, of course, bypass the decision whether to take out income protection or mortgage protection by buying both policies. This gives them coverage for all eventualities. But, for the majority of people, there will be one clear choice between income protection insurance and mortgage protection insurance depending on their circumstances.    

Compare insurance providers

 
 
 
 
 
 
 
banner

 
 
© MyMoneyHelp.com. All Rights Reserved.    Sitemap | Newsletter | About | Contact | Terms of Use | Privacy | Online Coupon Codes

Valid XHTML 1.0 Transitional

img