Trying to work out how long your savings would last for if you were unable to work as a result of being made redundant or suffering a health setback can be a pretty frightening exercise.

In the current era of sky-high house prices many people would find that any spare cash was swallowed up by the mortgage payments alone within only a few months. After all, anyone with limitless reserves is most unlikely to need a mortgage in the first place.

Those who assume that the so-called “State safety net” will bail them out in their hour of need may find that they are in for an unpleasant surprise.

Come the crunch, most homeowners would not be eligible for any State assistance with their mortgage by virtue of the fact that they have savings totaling over £8,000 or a full-time working partner.

Even the minority who do qualify for State support will receive no help with capital repayments and will only get help with interest payments on mortgages of up to £100,000. Furthermore, this will not be available for the first nine months for those who started their mortgages after October 1995.

But it is possible to take out private insurance against the consequences of losing your income. Mortgage payment protection insurance provides a regular monthly benefit if you are unable to work as a result of illness, injury or unemployment.

Mortgage Payment Protection Insurance typically pays out for a maximum of one year, although a small minority of Mortgage Payment Protection Insurance policies pay for two years, and it can be used to cover both interest and capital repayments together with other mortgage outgoings like premiums for endowment or household insurance policies.

A major attraction of Mortgage Payment Protection Insurance is that older people, smokers and those with poor medical histories are not penalised. All Mortgage Payment Protection Insurance policyholders pay the same pro-rata premium rate, but pre-existing conditions (medical conditions that policyholders have prior to coming on cover) are excluded.

The most competitive Mortgage Payment Protection Insurance providers charge less than £4 a month per £100 of monthly benefit covered. So it can be possible to cover a modest mortgage for around £20 a month - an amount that won't necessarily leave you with much change from a round of drinks nowadays.

Nevertheless, be warned that mortgage lenders often charge far more than this for Mortgage Payment Protection Insurance. The quality of their Mortgage Payment Protection Insurance cover is also often markedly inferior to that sold by specialist Mortgage Payment Protection Insurance providers. For example, they often don't pay out until an initial 60 day exclusion period has elapsed, whereas specialist providers normally offer cover that backdates payments to day one

But even the very best Mortgage Payment Protection Insurance policies are not guaranteed to suit everyone. Those who have illnesses that are likely to reoccur may for example, decide that the exclusion for pre-existing medical conditions makes the Mortgage Payment Protection Insurance cover poor value.

Similarly Mortgage Payment Protection Insurance can fail to appeal to the self-employed on the grounds that it only pays out if they cease trading altogether and will not help them if they simply hit a quiet patch.

Even those in employment should be aware that Mortgage Payment Protection Insurance only pays out for unemployment that is involuntary. If they take voluntary redundancy they will not therefore be covered.

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