Mortgage Payment Protection Insurance
A mortgage payment protection insurance (MPPI) is a policy created to manage your mortgage instalments in the occurrences of unemployment or a severe health issue. According to surveys, the most costly bill that most people face is a mortgage repayment bill.
Around 18% of average household earnings go towards paying back mortgages. As this loan has such a significant influence, it is good to have a contingency plan for how you would make these payments if you were to forfeit your primary source of income; this is where a mortgage payment protection insurance (MPPI) can help.
At Care Financial Services, we know the strain you may have to go through on not fulfilling your mortgage payments with punctuality, mainly if you are the sole provider of your household. That is why we motivate our clients to take up an MPPI, as this policy can save you from any loss in events such as sickness or unemployment.
Once you have an MPPI, you can be carefree about your mortgage payments. Give us a call at Care Financial Services today, and let’s guarantee your mortgage payments together.
Benefits of Mortgage Payment Protection Insurance
Now that we know what MPPI is, let’s take an in-depth look into the policy.
If for any excuse, you have to quit your job for a distinct period (between 30-60 days) due to any illness or redundancy, then your insurance will equip you with a set monetary amount each month. This finance can even be employed to pay your utility bills which often means the policy will deal with 125% of your mortgage.
However, an MPPI has an ‘exclusion period’, which means that the policy must be in place for at least 30-60 days for you to make a claim. Along with this, the duration of your policy can be 12 months to 2 years, depending on which term you take.
MPPI covers diverse situations through three types of policies which are as follows
- RemoveUnemployment/Redundancy:
Through this type, you can acquire a payout if you have been fired or can’t find a job.
- Injury/Sickness:
This cover will allow you to get payouts if you cannot go to work due to an injury or serious health issue. - Unemployment/Sickness:
Such policies provide financial help if you cannot work due to unemployment and healthcare issues.
If you are not sure about what’s the procedure, do not worry because our specialists are always there to help you through the entire procedure.
Secondly, you don’t need any separate documents for this insurance plan, just your essential details, annual earnings, mortgage payments, and job details.
Equivalent to other insurances, MPPI does not cover happenings from the past, especially if you have faced any health condition before.
It is not necessary to have an MPPI, but it’s essential to consider the future and how you plan to keep up with your mortgage term. As mentioned above, this can be done through MPPI, but there are also other options available such as
Income protection: An income protection policy is more thoroughgoing than an MPPI as it delivers a certain percentage of your
- income (up to 60%) instead of just your monthly mortgage expenditures. Furthermore, income protection’s term duration is much longer than an MPPI term. Income insurance covers your financial obligation till you rejoin your job or retire. Income protection plans are indeed more costly than MPPI.
- Critical illness cover: A critical illness policy provides you with monetary aid in the case of a severe health problem due to which you cannot go to work. This policy is usually attached to life insurance. Under a critical illness cover, not all illnesses are covered, and unlike an MPPI, it doesn’t cover unemployment.
- Life insurance: A payout is given to your family or dependent in the occurrence of your death through a life insurance policy. This payout can be claimed all at once or through monthly instalments. Such life insurance policies are usually known as ‘decreasing’ because payouts are usually lower as your loan shrinks. However, you can’t replace an income protection plan with an MPPI because it doesn’t cover unemployment. Taking out both policies to cover their respective objectives is a good idea.
If you are worried about which protection policy to use to keep your mortgage payments consistent, then have a light discussion with your mortgage advisor. Your mortgage broker can help you find applicable and affordable deals and tailor your policy to suit your circumstances.
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How Can Care Financial Services Help You
Nowadays, most people have at least one or more insurance covers, making it unfair to call an MPPI an option. However, in reality, the query ‘Can I afford it?’ plays a considerable role in your insurance-related decisions. So even though it’s remarkable to be protected from all directions, a good financial advisor is vital to help you find the correct cover that suits your condition and is within your budget.
We provide our mortgage clients with free-of-cost protection reviews with their mortgage contracts at Care Financial Services. We also help people who already have a mortgage but don’t have security with the most eligible insurance review. Through this review, we go through every element of the process, answering any inquiries you may have along the way. So what’s the hold-up? Contact us today, and let’s help you protect yourself and your assets in the best manner possible.
Frequently Ask Questions
If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.
A standard mortgage may have a premium of £20-£25 on average, but in some cases, lenders may offer as less as £10 and as much as £40 per month on instalments. Usually, your monthly instalments are determined by several factors, such as your age, income, occupation and mortgage repayments. For instance, if you work at a 9-5 office job, you will be less likely to face any severe injury than a person working a manual labor job, which would mean your payments will be low.
In all types of insurance, there is a standard rule that ‘the higher your compensation, the more monthly premium you will have to settle. Your premiums may also be higher if you opt for a short ‘waiting period’ or if you have more than one issue stopping you from going to work.
Most protection policies cover up to 70% of your yearly income. It’s important to remember that the more cover you receive, the more the insurance plan will cost you. Research showed that the average payout for 2018 was as follows:
- Critical illness- £70,925.83
- Life insurance- £81,268.78
- Income protection- £22,058.45
It’s a myth that insurers don’t like to compensate on claims, but that’s not utterly true. Surveys show that in 2018, 97.6% of protection claims were paid by insurers. Hence, if you have the right policy in place and have everything rightly done, then your claims will not be rejected.
It is impossible to claim straightaway because an exclusion period existed before, so you can’t make a claim. For an MPPI that compensates for your unemployment, the exclusion period may be more significant – this is to restrict people who know they will be made redundant from taking out any insurance policy. Furthermore, there is also a waiting period which is an agreed period from when you stop work till you get your first payout; this period can last from 1-6 months.
MPPI and PPI have very little in common. The only similarity they both have is that they are policies that cover just one debt at a time. MPPI is more focused on your mortgage plan, and you will directly receive your compensation. While PPI focuses on unsecured finances, the lender pays the compensation.
Yes, if you have any habits such as smoking or drinking, your insurance policy may cost you more as you will pose a higher risk of illnesses and are more likely to make a claim.
Disclaimer:
The content on this page is based on our understanding and knowledge at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. Please contact us if you require further information about the content included on this page.
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0113 518 1624
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