What happens to my mortgage if I cannot work?
Your mortgage payments continue whether you are working or not. If illness or injury stops you working, you may rely on sick pay, savings or family. For many people, that support runs out within weeks or months.
Statutory Sick Pay is a modest weekly amount and is unlikely to cover a typical mortgage payment. Employer sick pay varies widely, and the self-employed usually get none. Missing mortgage payments can damage your credit record, and your home may be repossessed if you do not keep up repayments.
Many people assume serious illness or long absences from work happen to others. In reality, back problems, mental health conditions and injuries are common reasons for time off. A protection plan aims to give your household time and money to recover without losing the home.
What is income protection?
Income protection pays a regular monthly benefit if you cannot work because of illness or injury. It usually pays a proportion of your income, often around 50% to 70% before tax. Payments continue until you return to work, the policy ends or you retire.
- Deferred period: the waiting time before payments start, such as 4, 13 or 26 weeks. A longer period lowers the premium.
- Definition of incapacity: own occupation cover pays if you cannot do your own job, which is usually more valuable.
- Benefit period: full term or limited, such as two years per claim.
Match the deferred period to your sick pay and savings. For example, if your employer pays full salary for three months, a 13-week deferred period may make sense. Our income protection page explains the options.
Do I also need life insurance?
Life insurance pays a lump sum if you die during the policy term. Many borrowers use it to repay the mortgage, so their family can stay in the home. It is especially important if anyone relies on your income.
Decreasing term cover falls roughly in line with a repayment mortgage and is often cheaper. Level term cover pays a fixed amount, which can suit interest-only mortgages or families wanting extra money. Writing a policy in trust may help it pay out faster and outside your estate. See our life insurance page.
What about critical illness cover?
Critical illness cover usually pays a tax-free lump sum if you are diagnosed with a specified serious illness covered by the policy. You could use it to reduce or repay your mortgage, adapt your home or cover costs while you recover.
Policies differ in which conditions they cover and how they define them. It often complements income protection rather than replacing it. Read the definitions carefully, or ask an adviser to compare them. Our critical illness cover page has more detail.
Who needs protection most?
Anyone whose household relies on their income to pay the mortgage should consider protection. It is particularly relevant for:
- Self-employed people and company directors with no employer sick pay.
- Single-income households and single parents.
- First-time buyers with stretched budgets and small savings.
- Borrowers with large or interest-only loans.
- Anyone taking on more borrowing when they remortgage.
Check what your employer already provides, such as death-in-service, group income protection or extended sick pay. This can reduce how much personal cover you need, but it usually ends if you change job.
How much does protection cost?
Premiums depend on your age, health, smoking status, occupation and the amount and type of cover. Cover taken when you are younger and healthier is usually cheaper. Guaranteed premiums stay fixed. Reviewable premiums can rise over time.
Be honest on your application. Insurers decide cover through underwriting, and not disclosing relevant information can lead to a claim being reduced or declined. Cover is always subject to the policy terms and exclusions.
Protection does not need to cover everything. Many borrowers start with cover for the mortgage and essential bills, then add more as budgets allow. An adviser can help you balance cost and cover.
When should I review my cover?
The best time to arrange protection is when you take out or change your mortgage. Review it whenever your circumstances change, such as moving home, remortgaging, having children, changing jobs or becoming self-employed.
OMB arranges protection alongside mortgages, so your cover fits your borrowing. Buildings insurance is usually a mortgage condition too; see our buildings and contents insurance page.
A short review can show whether your current cover still matches your mortgage, and where any gaps remain.
Income protectionA monthly income if illness or injury stops you working.
Explore income protectionFrequently asked questions
Is income protection worth it for homeowners?
For many homeowners, yes. If illness or injury stopped you working, income protection can pay a monthly benefit to help cover your mortgage and bills. Its value depends on your sick pay, savings and household income. Cover depends on underwriting and policy terms.
Is mortgage protection insurance compulsory?
No. Lenders do not usually require life insurance or income protection, though they do normally require buildings insurance. Protection is optional, but it can help your family keep the home if something happens to you. Cover depends on underwriting and policy terms.
What is the difference between income protection and critical illness cover?
Income protection pays a monthly benefit if you cannot work due to illness or injury, until you recover or the policy ends. Critical illness cover pays a one-off lump sum if you are diagnosed with a specified serious condition. Many people combine the two.
How much life insurance do I need for my mortgage?
At a minimum, many people insure the outstanding mortgage balance for the remaining term. You may want more to cover living costs, childcare or other debts. Decreasing cover suits repayment mortgages. Level cover suits interest-only mortgages or extra family needs.
Can self-employed people get income protection?
Yes. Self-employed people can usually get income protection, and it is often more important for them because there is no employer sick pay. Insurers assess income using tax returns or accounts. Occupation affects the premium and the type of cover available.
Will a pre-existing condition stop me getting cover?
Not necessarily. The insurer may offer cover at a higher premium, exclude the condition, or in some cases decline. Disclose all relevant information honestly, as non-disclosure can affect a claim. Different insurers take different views, so comparing options can help.
Important: This guide is general information, not personal advice. Rules, rates and lender criteria change; speak to an adviser about your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage.