Protection specialist APRIL UK has launched a mortgage protection plan, that takes advantage of a key development in state benefit calculations.
Last year the Department of Work and Pensions (DWP) confirmed that benefits from protection plans designed to cover mortgage repayments would be exempt from state benefit calculations.
While benefits are not payable directly to the mortgage lender, APRIL UK believes that all the paperwork and schedule of insurance meet the DWP’s requirement that benefits are intended to cover – and be used to pay for – a specific mortgage.
The Mortgage Protector Plan has been created to cover up to 125% of the policyholder’s monthly mortgage payments if they can’t work due to accident or sickness.
Isaac Lam, chief executive at APRIL UK, said: “The protection industry has always had a strong focus on life insurance, which everyone agrees has a key role to play.
“We believe that plans that protect against incapacity to work, which is much more likely to occur than death during working age, should receive more of the limelight.
“Our Mortgage Protector Plan is a simple and effective way to protect what, for most people, will be their biggest monthly outgoing. And with DWP’s decision to make benefits from these plans exempt from their assessments, it’s an even stronger solution to put forward.”
Benefits are payable for up to two years, with a variety of waiting period options from 30 days to 180 days.
It’s underwritten on a moratorium basis which means there are no medical questionnaires and acceptance is guaranteed, subject to the basic eligibility criteria, primarily being aged 18 to 64 and a UK resident.
The moratorium clause excludes pre-existing medical conditions – defined as any medical condition where you have received care or experienced symptoms in the two years before the start date. APRIL UK has produced a guide on this matter to help advisers explain this clearly to their clients.
Those who take out a Mortgage Protector Plan within three months of completing on their mortgage will be entitled to receive a discount on premiums.