There are several types of mortgage protection insurance available to homeowners. Each type offers different benefits and coverage options tailored to meet various needs. It's essential to understand these options to choose the right policy for your financial security. sure to evaluate your circumstances and consult with a professional to find the best fit for you.
Mortgage Payment Protection Insurance (MPPI)
This covers your monthly mortgage payments if you become ill or injured and can’t work. It doesn’t pay off the full mortgage, but it helps you stay on top of your monthly payments.
The policy typically pays out a percentage of your monthly mortgage (e.g., 70%) if you're unable to work due to illness or accident. Some plans also include redundancy.
Mortgage Life Insurance
This is designed to pay off your mortgage in the event of your death. It’s typically life insurance specifically for the amount of your mortgage.
If you pass away, the insurance payout is used to clear your mortgage balance, ensuring your family doesn’t have to worry about the home. The payout amount often decreases as you pay down the mortgage.
Income Protection Insurance
This is broader than just mortgage protection and provides a monthly income if you're unable to work due to illness or injury.
A percentage of your pre-tax income (usually up to 60-70%) is paid to you on a regular basis, helping you meet all your financial commitments, including your mortgage.
Critical Illness Insurance
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This is a type of insurance that pays a lump sum if you're diagnosed with a serious illness (like cancer, stroke, or heart attack) that prevents you from working.
If you suffer a serious illness covered by the policy, you get a lump sum payment, which you can use for anything—including paying off your mortgage or covering living expenses.
In summary:
Life insurance - pays out if you die (clears mortgage balance).
Mortgage payment protection - helps cover payments if you can’t work due to illness or injury.
Critical illness - pays out if you’re diagnosed with a serious illness that prevents work.
Income protection - covers a portion of your income if you can’t work, which you can use for any expenses, including mortgage.