Mortgage payment protection insurance (or MPPI) is an insurance product that can help you keep up with your monthly mortgage repayments in the event that you lose your income due to involuntary redundancy; recovery from an accident; or prolonged illness. This means that at an already stressful time, you will not have to worry how to keep your home safe from repossession.
You may think that you will never need to use this type of insurance policy, but anyone of us is vulnerable to redundancy, especially in an uncertain economic climate. And having an accident or being hospitalised due to illness, with a long recovery period afterwards, is something that can happen to anyone. You simply cannot put a price on the peace of mind that a mortgage payment protection insurance policy could give you.
So, how does the cover work?
Well, the mortgage protection insurance will start to pay out a tax free monthly sum anywhere from thirty to ninety days after you are made redundant or become incapacitated. The waiting period depends on the individual policy terms and conditions so do check this when looking for your cover.
The sum you receive can go towards maintaining your monthly mortgage commitment as well as associated costs such as home, life and critical illness insurance, up to the provider’s pre agreed payment limits of course.
Back to day one benefits
Some providers will also back date your claim to the first day of your illness or unemployment – this is often known as ‘back to day one’ cover – so, again, check out the policy features and benefits to see if your policy affords you this.
Protection for up to 24 months
Once the benefits have started to pay out, these will run until you get back to work, or for anything up to 12 24 months whatever happens sooner. Some mortgage payment protection insurance providers will offer cover that pays out benefits for 12 months while others offer protection for 24 months, so make sure that the policy you choose is one that best suits your requirements.
Where to buy?
Knowing where to buy your cover is probably the most important aspect of getting the right cover for you. Typically you would have been offered your mortgage payment insurance at the time of taking out your mortgage borrowing. However, as numerous studies as shown, this can be an expensive way to buy your cover. Banks and lenders have been known to charge high premiums for the cover in order to make a hefty profit. However, choosing to buy your cover from an independent provider can often see you get a better deal, and a policy that sometimes has additional benefits thrown in that the mainstream cover does not offer, such as the back to day one cover.
Compared to the price of the cover from the traditional sources, standalone providers of mortgage payment protection insurance can often save you around 40 on the cost of the protection, making it an affordable solution for anyone seeking to protect the roof over their head.
Sean Horton is a Director of Enhanced Wealth (http://www.mortgagerepaymentinsurance.co.uk ) who offer competitive mortgage insurance cover for mortgage repayment insurance
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