How Mortgage Payment Protection Insurance Works
Mortgage Insurance to Stop Repossession during Difficult Times
Dec 4, 2008
The indeterminate nature of life means that mortgage payment protection insurance is now of fundamental importance. Mortgage protection ensures that mortgage payments are covered in full in the event of poor health and involuntary redundancy.
Why Get MPPI to Cover Mortgage Payments?
Although MPPI is not compulsory, it is advisable to get cover as state assistance with mortgage payments has restrictions. If personal savings exist, any means tested help is unlikely to be provided until any savings have been depleted.
What Does an MPPI Policy Cover?
A good quality MPPI policy will start to cover mortgage payments within one month of involuntary redundancy or poor health occurring. Coverage usually lasts for 12 months as it is expected that most claimants will have physically recovered or identified a new source of employment.
- Involuntary unemployment;
- Accident and sickness;
- Hospitalisation;
- Carer cover
Who isn't Mortgage Payment Insurance Right For?
- Those already publicly informed that they are to be made redundant. It is possible that a claimant may be able to claim if informed privately when working for a small company, but the last thing needed is false hope created by a policy that was never valid from the outset. At least 6 months of payments must also be made prior to any claim.
- People who are self employed, work part time or are performing short term contract work. Without a secure source of work, no valid policy would ever exist.
- If a pre-existing medical condition exists. If any medical condition already exists it is excluded for the purpose of making a claim.
- If over the age of 64. Anyone who has reached retirement age is automatically excluded due to pension eligibility and the higher risk associated with elderly people.
- If substantial savings already exist. Insurance cover is only for 12 months and it may be possible for those with savings to cover any costs for that period.
Buy Mortgage Payment Protection Insurance from an Independent Source
Most buy mortgage payment protection insurance directly from the mortgage seller. However, it is usually more prudent to get a quote from an Independent Financial Advisor. Money Week Editor-in-chief Merryn Somerset Webb stated that "The High Street banks charge up to five times as much in premiums as the few independent providers out there."
It is important to always carefully inspect the T&C's of a mortgage payment protection insurance policy to make sure it provides the cover needed. Don't take out mortgage insurance when not eligible in the first place as it's money down the drain.
Those who found this article useful may be interested in finding out about income protection insurance. If debt problems are currently an issue, please consult a qualified debt counsellor for assistance. There are a number of debt solutions available to assist with turning financial problems around.
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