Mortgage
Protection
Mortgage Payment Protection Insurance (sometimes
referred to
as MPPI) is
a type of
insurance
that is now
very popular
in the
United
Kingdom. It
is often
sold by the
company that
also
arranges
your
mortgage
when you buy
a property.
It is a way
of ensuring
that your
monthly
mortgage
payments are
made in the
event of you
becoming
unemployed.
Unemployment
can be
caused by
accident,
sickness or
redundancy.
It is
usually the
case that
the claimant
must
register at
an
unemployment
to be
eligible for
benefit from
the Mortgage
Payment
Protection
Insurance.
Benefit is
usually paid
for up to
either 12 or
24 months,
this is
usually
sufficient
time for the
claimant to
regain
employment.
People often
believe that
if they
become
unemployed
the state
will help
them out,
unfortunately
this is no
longer true.
The majority
of MPPI
policies
have a fixed
premium
regardless
of sex, age
or
occupation.
The premium
is normally
expressed as
a percentage
of £100 per
month of
benefit
selected.
More
recently
Mortgage
Payment
Protection
Insurance
policies are
being
developed
with new
premium
rating
systems.
These age
related
policies
provide much
cheaper
premiums for
younger ages
making the
insurance
more
affordable.
What is
mortgage
protection
Becoming
unemployed
can cause
many
problems,
not least
the fact
that there
simply may
not be any
money to pay
the bills.
Most people
will agree
that their
home is
their most
important
material
possession,
yet if
mortgage
payments
cannot be
made, the
security of
a home can
be taken
away.
You cannot
rely on
state help
to cover
your
mortgage
payments if
you cannot
work. There
is no help
for the
first nine
months of
unemployment
or
disability
for
mortgages
taken since
October
1995.
Existing
borrowers
only qualify
for benefit
if they
qualify for
Income
Support.
You can buy
cover to
protect your
mortgage
payments if
you have an
accident or
become ill
and cannot
work, if you
become
unemployed,
or to
provide full
cover for
accidents,
sickness and
unemployment.
The terms
and
conditions
under which
you can
claim differ
with every
policy, so
you should
always check
them very
carefully.
The Benefit
period is
the length
of time you
can claim
monthly
payments
for, and
these vary
for each
policy. You
can select
the time
period you
want to be
covered (1
year, 2
years etc)
but the
longer you
want the
cover for,
the more
expensive
the premiums
will be.
There is
always an
Initial
Exclusion
period at
the start of
the
contract,
during which
time no
claim can be
made. This
normally
applies to
unemployment
only and is
30, 60 days
or longer.
Most
policies
also have an
excess
period, for
each & every
claim. An
amount of
days 30, 60
or more
which are
excluded
from the
claims
payment. For
example with
a 60-day
excess, and
a claim for
65 days, 5
days are
paid.
Alternatively
some have a
waiting
period after
which time
the claim is
paid in
full. With a
30 day
waiting
period, on
the 31st day
of
unemployment
or
disability
the claim is
back dated
to day 1 &
paid in
full.
Most
providers
will cover
your
mortgage
payment and
a little
extra for
mortgage
related
bills, such
as pensions,
insurances
etc. They
usually
offer an
extra 5, 10
or even 25%
but may have
conditions
on what this
money can be
used for.
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