Mortgage Payment Protection Insurance The Dos And Donts

Mortgage Payment Protection Insurance the​ Dos and Donts
When youve taken out a​ mortgage youve make a​ longterm commitment to​ maintain the​ monthly repayments for the​ full duration of​ the​ mortgage. Thats going to​ be over many years but youre making that commitment without the​ benefit of​ a​ crystal ball no one knows how your circumstances are going to​ change,​ for good or​ bad. So that must represent a​ big risk. Mortgage Payment Protection Insurance MPPI is​ one of​ a​ range of​ insurances that includes life insurance and critical illness insurance,​ which you​ can reduce that risk and protect your familys finances.
The purpose of​ MPPI is​ to​ ensure that your mortgage repayments will continue to​ be paid if​ youre off work for an extended period due to​ accident,​ sickness or​ unemployment. Just consider the​ risks that this type of​ insurance is​ designed to​ alleviate
Home repossessions run at​ about 90 per day. Most of​ these are due to​ financial problems associated with unemployment.
One third of​ all people aged between 25 and 34 have experienced unemployment for more than a​ month.
During the​ term of​ their mortgage most people experience at​ least one period of​ illness,​ or​ the​ repercussions of​ an accident,​ which will keep them off work for more than 3 months.
If you​ have a​ standard repayment mortgage,​ youre well advised to​ set the​ value of​ monthly MPPI cover to​ equal the​ value of​ your monthly repayment plus your life insurance and home & contents insurance premiums. However,​ if​ you​ have an interest only mortgage,​ then your cover also needs to​ include the​ monthly cost of​ the​ investment plan youre using to​ repay the​ mortgage at​ the​ end of​ its term. Also remember that if​ your mortgage repayments subsequently change due to​ interest rate movement,​ then you​ need to​ contact your insurer and get the​ policy similarly modified. Oh yes,​ the​ nice bit if​ you​ claim then the​ income payout is​ totally taxfree!
11 Top Tips for buying
Mortgage Payment Protection Insurance
Dont think that you​ can only take out MPPI when you​ arrange the​ mortgage. you​ can take out MPPI at​ any time.
Be aware that some mortgage lenders will try to​ pressurise you​ into taking out MPPI along with your mortgage. if​ this happens,​ make sure you​ find out how much extra the​ cover will cost each month and then get on​ the​ Internet and get a​ few competitive quotes. Most people will find savings of​ up to​ 60%!
Mortgage lenders will only quote you​ for the​ cover needed to​ meet your monthly mortgage repayments. Remember our advice to​ include cover for the​ cost of​ your mortgage life insurance,​ your home & contents insurance and the​ cost of​ any investment plan you​ have allocated to​ repay your mortgage the​ latter item applies only to​ interest only mortgages.
If your employment is​ seasonal or​ casual you​ wont be able to​ claim on​ an MPPI policy. Every policy has what are called exclusions and seasonal and casual work is​ just a​ typical one. Exclusions are the​ circumstances under which you​ cannot make a​ claim. Always read these exclusions before you​ take out the​ policy and if​ you​ can see that your circumstances mean that youre unlikely to​ be able to​ make a​ valid claim,​ dont buy the​ policy. in​ some cases,​ the​ policy exclusions will eliminate 50% of​ potential claims.
Dont automatically opt for the​ cheapest MPPI policy. the​ conditions under which policies pay out do vary so check them out carefully. Premiums are always a​ reflection of​ the​ extent of​ the​ exclusions in​ the​ policy,​ the​ level of​ cover provided and the​ insurers general marketing strategy.
Dont get confused by the​ different names given to​ MPPI. it​ can also be described as​ Accident Sickness and Unemployment Insurance,​ Payment Cover and Payment Care. Basically,​ they all do the​ same but remember to​ check out the​ exclusions!
Most policies state that you​ have to​ be off work for a​ minimum period of​ time before you​ can make a​ claim. the​ maximum period youll find is​ 60 days but many policies reduce this to​ 30 days and some will then backdate the​ payment to​ the​ first day you​ were off work. Youll find full details about these aspects in​ the​ policys Terms and Conditions. Always check these out before you​ buy and remember when youre comparing prices,​ to​ compare like with like.
Dont confuse MPPI with Mortgage Indemnity Insurance MIG. Mortgage Indemnity Insurance p rovides cover for a​ mortgage lender for any losses the​ lender might suffer as​ a​ result of​ a​ property on​ which they provided a​ loan being sold for less than the​ amount of​ the​ loan. Any payout under a​ MIG policy goes to​ the​ lender,​ not you!
If you​ already have Permanent Health Insurance your may not need MPPI. Check out the​ terms of​ you​ PHI policy.
Be aware that there is​ a​ level of​ duplication between Critical Illness Insurance and MPPI. MPPI will pay you​ an income during the​ insured period for any illness that prevents you​ from working. Critical illness Insurance will payout a​ lump sum if​ you​ are diagnosed with any of​ the​ chronic illnesses listed on​ the​ critical illness policy. So if​ you​ have a​ critical illness claim,​ then you​ will almost certainly also have a​ claim on​ your MPPI policy. However,​ if​ the​ illness thats keeping you​ off work is​ not listed on​ the​ chronic list,​ and all ordinary illness arent,​ then only your MPPI policy will payout.
Shop around. as​ with most types of​ insurance,​ the​ Internet is​ the​ cheapest place to​ shop and many sites will enable you​ to​ arrange cover immediately online. Try searching under mortgage payment protection insurance rather than just mortgage protection. That search term is​ totally specific and youre bound to​ find what you​ want.

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