Payment protection insurance (pojištění schopnosti splácet, PSS) pays your mortgage instalments if you fall ill for a long time or lose your job involuntarily; the broader packages also clear the loan if you die or become disabled. Banks price it as a share of the monthly payment: at UniCredit Bank 5.50 to 11.00 % depending on the package, so on a CZK 4,000,000 mortgage over 25 years you pay CZK 1,286 to 2,572 a month.
It pays only within the policy terms, though: usually after 30 days at the earliest, for no more than 6 to 12 payments per claim, and only if you did not resign yourself. Whether it is worth having depends on your savings and on whether the policy would actually cover you in practice. Cover for death and disability, and the rate discount banks give for insurance, are dealt with in Life insurance for a mortgage. This article is about losing your income.
What it covers and how it pays out
| Risk | What the insurer pays | Typical limit |
|---|---|---|
| Death | the outstanding balance on the day of death | exclusions for illnesses known before the cover started |
| Grade 3 disability | the outstanding balance | only if your capacity to work has fallen by at least 70 % |
| Sickness absence | the instalments for as long as you are off sick | 30-day deferred period, at most 12 payments per claim |
| Involuntary job loss | the instalments while you are registered with the labour office | qualifying period from the start of cover (3 months at UniCredit), 30-day deferred period, at most 6 (UniCredit) to 12 (Raiffeisenbank) payments |
| Critical illness (some packages only) | a one-off multiple of the payment, nine times at UniCredit | only the diagnoses listed in the terms |
Cover arranged through the bank is usually a group policy. The bank is the policyholder, and you simply join its contract with the insurer as an insured person. You cannot negotiate the scope of cover, but you can end your own participation.
Payouts for death and disability go straight to the bank and reduce the loan. What happens next when a borrower dies is described in Mortgage and the death of a borrower.
How much does payment protection insurance cost?
The premium follows your payment, not your age or health. UniCredit Bank says explicitly that it does not depend on age at entry, sex or state of health. A young, healthy borrower therefore pays as much as an older one with a diagnosis, and for younger people a standalone risk policy often works out cheaper.
What it comes to on CZK 4,000,000 (annuity payment of CZK 23,384 at 5.00 % over 25 years; package prices from UniCredit Bank's documentation dated 09/2025):
- BASIC, i.e. death and disability: 5.50 % of the payment, CZK 1,286 a month, CZK 77,166 over a five-year fixed period.
- STANDARD, which adds sickness absence: 8.50 %, CZK 1,988 a month, CZK 119,256 over five years.
- FULL, which adds job loss and critical illness: 11.00 %, CZK 2,572 a month, CZK 154,332 over five years.
Moving up from STANDARD to FULL costs CZK 585 a month, or CZK 35,075 over five years. In return, if you lose your job you receive at most 6 payments per claim, i.e. CZK 140,302, and you still cover the first month yourself. A buffer of three payments, CZK 70,151, takes care of the start of any illness or job loss. Keep the same payment for all 25 years and FULL costs you CZK 771,659 in total.
If the insurance is a condition for a rate discount, set the discount against the premium. A discount of 0.2 pp is worth CZK 468 a month on this loan, while the cheapest package costs CZK 1,286. The insurance still costs you CZK 818 a month net, so it is not free. How to push the rate down is covered in How to negotiate a lower mortgage rate.
When will the insurer not pay?
- You handed in your notice yourself, or you left by mutual agreement without any organisational reason. Involuntary job loss typically means notice from the employer because of redundancy, closure or relocation of the workplace, or the employer's insolvency.
- You lost the job within the qualifying period after the cover started, or the employment ended during a probation period.
- You are not registered as a jobseeker. Registration with the labour office (úřad práce) is a condition of any payout.
- You were on a fixed-term contract: payments stop no later than the day the contract would have ended anyway.
- The illness falls under an exclusion. At UniCredit Bank these include psychiatric diagnoses, degenerative conditions of the spine and back, and sickness during a period when you draw maternity benefit (peněžitá pomoc v mateřství).
- You are self-employed (OSVČ). There is no cover for job loss, and sickness cover does not pay if your trade licence was suspended at the time.
Answer the health questionnaire truthfully. If the insurer proves it would not have insured you had you answered honestly, it can withdraw from the contract (§ 2808 of the Civil Code).
Who it pays off for, and who can skip it
It makes sense for a sole earner with no savings, for households where the mortgage takes more than 40 % of income, and for people in sectors with frequent layoffs. If you are self-employed, sickness cover can help, but no policy pays for lost contracts.
It tends to be wasted money if you have savings worth at least six payments, if either of two incomes could carry the payment alone, or if you already hold a standalone policy against death and disability. Insurance against job loss also gives you little during a probation period or on a short fixed-term contract.
How to cancel or replace the cover
You leave a group policy by written request, as the bank's terms set out. If the cover earned you a rate discount, the bank withdraws it, usually as its price list says. A standalone policy falls under the Civil Code. You can give notice within two months of taking it out, with an eight-day notice period (§ 2805), or otherwise to the end of the insurance period if your notice arrives at least six weeks before it (§ 2807). A policy taken out at a distance can be cancelled without giving a reason within 14 days, or within 30 days for life insurance (§ 2808(3)).
When you refinance, the old bank's cover ends with the loan, and the qualifying periods start again at the new bank. If a long illness or disability substantially reduces your ability to repay, the Consumer Credit Act lets you pay the mortgage off early without a fee, for example from the sale of the flat. When and how is explained in What to do if you can't pay your mortgage.
Sources
- UniCredit Bank / Generali Česká pojišťovna – payment protection insurance for mortgage loans, contract documentation (09/2025)
- Raiffeisenbank / UNIQA – payment protection insurance for mortgage loans, policy terms
- Act No. 89/2012 Coll., the Civil Code, § 2805–2808 (notice and withdrawal from insurance)
- Act No. 257/2016 Coll., on consumer credit, § 117 (free early repayment in case of illness or disability, amendment effective from 1 Sept 2024)