Mortgage Payment Protection Insurance
Published: 26th Jul 2010
Mortgage Payment Protection Insurance (MPPI) is a type of insurance policy that helps you pay your mortgage and associated costs should you be unable to work due to an accident, sickness or unemployment.
These policies often have a deferred period of 30 days, but are done on a back to day one basis, which means that all your entitlement will be back dated to your first day off work as long as the period of time you are off is more than a month.
MPPI is one of the most popular insurance polices on the market in, mainly due to the financial climate and consumers fearing their houses being repossessed.
Most people would be able to claim state benefits should they be made redundant or become unemployed but in most cases these would not be sufficient due to the fact that the government will only pay the interest on your mortgage.
The government also pays nothing for the first 9 months for any mortgage that has been taking out after October 1995.
With an MPPI policy consumers have piece of mind that their full mortgage payments and buildings & contents insurance will be paid for up to a year. It gives piece of mind that in the worst situation consumers are not going to lose what many consider to be their greatest earthly possession.
Sick Pay from Work
If you receive sick pay from work, it is possible to increase the deferrment period (the time after you are unable to work before your policy pays out) of your Mortgage Payment Protection to align it with the sick pay. This means that as soon as your sick pay runs out, your MPPI policy can begin paying out, ensuring there is no gap in your income. This can have a great effect on your premiums and can sometimes offer you considerable savings.
Other types of Insurance connected to your Mortgage
As well as your MPPI cover, you should also be considering a number of other insurances connected with your home and mortgage.
Mortgage Life Insurance
Mortgage life insurance can be essential if the very worst situation were to occur and you were to die. This type of insurance is designed to payout a lump sum of money to allow the mortgage to be paid off.
It is vitally important to anybody who has a family or dependants who might suffer if you were to die. By having the life insurance pay off the mortgage, you can ensure that your loved ones can continue to live in the family home and that they will not have to face the loss of their home when they are already dealing with the trauma caused by the losing a loved one.
Buildings and Contents Insurance
Buildings and Contents Insurance (also known as home insurance) is a type of insurance that will help to pay for the rebuilding/repair of your home should it be struck by a disaster such as fire or in some cases flooding.
The policies will also help to replace damaged goods within your home.
Most people greatly undervalue the actual price of having to rebuild a house and replace all of its contents. The associated costs can very quickly build up and most people simply do not have the level of savings which would be required to put their lives back on track should the worse happen.
Like with most subjects, insurance comes with its own language which can include its own confusing terminology. Our Jargon buster aims to help you clarify what some of the terminology you might find on our website means so that you can fully understand the policies and covers you are considering.