How Do You Differentiate Between A Mortgage Payment Protection And Income Protection?

By Author: Vijay Koragappa Shetty
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Mortgage payment protection and income protection are two different concepts which are often confused as one. Policy to safeguard your income will help you cover your salary in case you are out of work due to accident, injury, sickness, disability etc. And you are free to use it any way. It could be for your groceries, kid's school fees, medical fees and also covers your mortgage loan payments. But a mortgage protection is more specifically used to cover your mortgage payments in case you are out of work due to accident, injury, sickness, disability etc.

A mortgage policy will not necessarily cover your salary. But it is to save your collateral from being confiscated due to non payment of loans. This will help you keep up with your payments on time as your insurance will provide you the dues till you get back to work. You may get an additional 25% cover on the same policy which will help you pay other bills such as mobile bills, electricity bills or utility bills. On the whole the insurance premiums will be based on your loan repayments and not on your salary.

It offers one an advantage to recover while enjoying ...
... the benefits of the policies. When you have a policy, you can make use of the mortgage benefits or income benefits you get along with getting time to recover. So that, by the time you get back, things have fallen in place. If there is no policy to protect you, your collateral will be confiscated and you will have no money to cover up your other needs.

It's likely to feel depressed during this time, with no cash on hand. But a policy will provide you financial succour. Any savings might not last long enough to get you through paying your mortgage and of course you would also need money to live on and pay other outgoings at the same time. Income Protection is designed to pay out a tax free income to replace employed or self employed income which has ceased due to inability to work as a result of illness, injury or disability. It is an insurance against long term incapacity, without any unemployment option.

In short it is known as MPPI. MPPI is similar to unemployment insurance and allows you to protect yourself against redundancy and / or accident and sickness and providing you with a degree of insurance assistance with your mortgage repayments.

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