Paying your mortgage or rent if you cannot work

A mortgage or rent payment is usually the largest fixed bill a household has, and the one with the most serious consequences if it is missed. Mortgage arrears can affect your credit record and, in the end, your home. Falling behind on rent can put a tenancy at risk.

Lenders and landlords may be willing to agree a short-term arrangement, but they will still expect to be paid. A long absence from work, rather than a short one, is where the real difficulty lies.

Before any insurance, most people rely on two things. The first is sick pay. Some employers pay full salary for a set period, often followed by a period on half pay. Others pay only Statutory Sick Pay, which is a fixed weekly amount well below most people's housing costs. Self-employed people usually have no sick pay at all.

The second is savings. If you have enough set aside to cover several months of mortgage or rent plus bills, you can choose a longer deferred period and pay less for the policy. Our guide to income protection and sick pay explains how to line the two up.

Income protection

Pays a monthly benefit while you are unable to work through illness or injury and meet the policy's definition. Because it pays monthly, it lines up naturally with monthly housing payments. It can pay until you return to work, until the end of a limited payment period, or until the policy ends, depending on the option you choose. See our income protection product page for the main policy features.

Life insurance

Pays a lump sum if you die during the term, which can repay the mortgage for the people you leave behind. It does not pay while you are alive and off sick, unless a terminal illness benefit applies.

Critical illness cover

Pays a lump sum if you are diagnosed with a condition that meets the policy's definition. That can reduce or clear a mortgage, but many causes of long absences from work may not meet a critical illness definition, and renters have no mortgage balance to clear.

Mortgage payment protection insurance

A separate product, sometimes called MPPI, designed to cover mortgage payments for a limited period, usually a year or two. Some versions also cover unemployment. It suits a different, shorter-term need from income protection, and the terms vary between providers.

The main things to decide are:

• •The benefit amount: your mortgage or rent plus essential bills, less any income that would continue
• •The deferred period: ideally when your sick pay ends or your savings would start to run low
• •The payment period: until retirement or the end of the term, or a limited period on each claim at a lower cost
• •Whether the benefit rises each year, which helps if your rent or mortgage payments are likely to increase
• •The policy term, which for homeowners is often set to run at least as long as the mortgage, or to your planned retirement

Gather your monthly mortgage or rent, your other essential bills and your employer's sick pay terms. We can then compare policies from our panel on their definitions of incapacity, payment periods and price, and suggest a combination that protects your home at a cost you can keep up.

If you also want the mortgage cleared if you die, our guide to mortgage life insurance covers that side.