Taking out life insurance that includes critical illness cover was the sole method of gaining long-term mortgage protection until recently.
There are now options available to provide long-term payment protection as a substitute to short-term payment cover.
The traditional method of gaining long-term mortgage insurance was to include critical illness insurance with mortgage life cover.
This form of protection would payout a lump-sum should the policyholder suffer a 'critical illness' condition specified in their policy document.
The most common types of illnesses covered include heart attack, stroke and cancer.
The payout from the policy could be used to repay the loan in full if the amount of cover was set equal to the amount of debt outstanding at the start of the policy.
In addition to the cover mentioned above, many households would also take out mortgage payment protection to cover monthly loan repayments should the policyholder have to cease working due to short-term accident, sickness or unemployment.
One of the greatest issues with these policies is that they will only ever payout for a maximum period of 24 months.
If serious illness insurance is added to mortgage life cover then one would hope that any illness that lasts more than 24 months would be covered, however, there is a risk that the illness is not specified in the policy.
New long-term payment protection plans avoid this issue as they can payout until the end of the mortgage loan for nearly any medical condition that prevents the policyholder from working.
Thus, this new form of protection provides both an increased length of cover and an increased scope of protection.
The main downside is that it can cost considerably more, especially for older individuals.