When rates were ultra‑low, many households could ride out a bump in income. With today’s higher mortgage costs, a spell off work due to illness or redundancy can strain the budget fast. This guide walks through a typical scenario and shows how the main protection products can help — plus indicative starting costs so you can budget. At Grange Mortgages we’re always looking for ways to help our clients understand the impact of various scenarios on the family finances, so let’s dive in.

A typical family scenario

• Household: Two adults, no dependants, both in stable employment.
• Earnings: ~£35,000 each (gross). Approx. £2,200–£2,300 take‑home per person per month.
• Mortgage: £200,000 repayment, 25‑year term, 4.5% fixed.
• Monthly mortgage payment (illustrative): ~£1,112.
• Other core bills (illustrative): Council tax £180, utilities £180, broadband/mobile/TV £80, home/contents insurance £30, groceries/transport £700–£900.

Baseline: Combined take‑home ~£4,400–£4,600 p/m. Core outgoings ~£2,200–£2,400 p/m before discretionary spending.

If one income stops suddenly

Scenario A — Sickness (6 months off work):

• Typical employer sick pay tails off after the first weeks. Statutory Sick Pay is limited and time‑bound; it won’t cover a typical mortgage.
• Without cover, the household could be down ~£2,200–£2,300 p/m. Even with cutbacks, the £1,112 mortgage plus essentials may run a deficit.
• Income Protection (see below) can replace a set portion of income after a waiting period to keep mortgage and bills paid up to date.

Scenario B — Redundancy:

• Some employers offer redundancy packages, but there’s no guarantee of quick re‑employment.
• Short‑term Accident, Sickness & Unemployment (ASU) or Mortgage Payment Protection Insurance (MPPI) can offer up to 12–24 months of support (benefit caps apply).
• For longer‑term resilience, maintain an emergency fund of 3–6 months’ essential outgoings.

Scenario C — Serious illness:

• A major diagnosis (e.g., certain cancers, heart attack, stroke) can lead to extended time off work and extra costs.
• Critical Illness Cover provides a tax‑free lump sum on diagnosis of specified conditions to help reduce debt, fund adaptations, or bridge lost earnings.

Scenario D — Worst‑case (death):

• Life Insurance clears the mortgage and/or provides a family income so the surviving partner can keep the home and meet ongoing costs.

Indicative starting costs (healthy, non‑smoker)

Important: Prices vary by age, health, occupation, term/amount, defer period and insurer underwriting. The figures below are ballpark for budgeting only.

• Life Insurance (Decreasing Term) — £200,000 over 25 years: from ~£8–£12 p/m per person in early 30s; ~£12–£18 in late 30s.
• Family Income Benefit (FIB) — £20,000/yr to age 65: from ~£10–£16 p/m.
• Critical Illness Cover (CIC)— £100,000 lump sum, 25‑year term: from ~£30–£60 p/m per person in early/mid‑30s.
• Income Protection — £1,500 p/m benefit to age 65, 13‑week defer, own‑occupation: from ~£25–£45 p/m; a 26‑week defer can lower this.
• Accident, sickness & Unemployment (ASU/MPPI) — to cover £1,100 mortgage p/m for up to 12 months: from ~£15–£30 p/m depending on options and unemployment cover.

Many policies include extras (virtual GP, physio, mental‑health support, second medical opinions) at no extra cost — useful during recovery.

Putting it together for our example household

• Goal 1: Keep the roof over your head.
  • Decreasing Term Life for £200,000 aligned to the mortgage term.
  • Critical Illness (e.g., £50k–£100k each) to cut the mortgage or fund recovery time.
• Goal 2: Replace pay if you’re ill/injured.
  • Income Protection each, with a defer period matching employer sick pay (e.g., 13 or 26 weeks) to reduce cost.
• Goal 3: Short shocks & redundancy.
  • Consider ASU/MPPI for 12 months’ mortgage cover if job security is a concern.
• Goal 4: Affordability.
  • Start with core cover (life + basic IP) and layer CIC/FIB as budget allows. Review annually or at life events.

How we’ll help you design the right mix

1. Audit your employer benefits (sick pay, death‑in‑service).
2. Set priorities & budget (what must be protected first).
3. Search for the most appropriate terms/definitions — not just the cheapest headline price.
4. Coordinate with your mortgage (term, amount, ownership) and build in flexibility (indexation, guaranteed rates, waiver of premium).
5. Review annually or when you move, remortgage, or have a child.

Quick FAQs

• Can we cover just the mortgage? Yes — decreasing life cover is designed for this and is typically the lowest‑cost option.
• What if I have a past condition? Underwriting varies by insurer; we’ll pre‑screen to find the best fit.
• Joint or single policies? There are pros/cons to each (cost vs flexibility and payout structure). We’ll model both.
• Can we reduce cost later? Many policies allow level changes or benefit reductions; Income Protection deferal periods and terms can be revisited at reviews.

Next steps

• Book a 20‑minute protection review (evenings and weekends available). We’re proud to offer appointments 7 days a week.
• Bring details of employer sick pay, any existing policies, and your monthly budget.
• We’ll provide clear, no‑jargon recommendations tailored to your mortgage and goals.

Call 0300 303 0707 or Get in touch to start your protection plan.