Sometimes referred to as mortgage payment protection insurance, MPPI, mortgage protection insurance or even just mortgage insurance – regardless, the overarching principle is the same. It’s all about protecting a person and their home by covering the cost of their mortgage repayments in the event that unforeseen circumstances render them unable to continue making them.
Cover is available to cater to various circumstances
There are generally three types of mortgage payment protection insurance: (a) unemployment only, (b) accident and sickness only and (c) accident, sickness and unemployment. As its name suggests, the first of those types of MPPI will only pay out in the event of redundancy; you are also required to be registered as unemployed with the government, and actively looking for work.
The second type of MPPI policy, meanwhile, will only protect you in the event that you suffer a long-term illness or accidental injury that prevents you from working.
If, therefore, you wish to be covered against all of the aforementioned possibilities, it’s an accident, sickness and unemployment MPPI policy that you are advised to consider.
Do you actually need mortgage protection cover?
While the general principle of mortgage payment protection insurance is certainly sound in terms of giving peace of mind and protection for those in need of it, it’s important to carefully consider individual circumstances before starting to assess and compare policies.
It may be the case that if you are made redundant, for instance, you will receive a bumper redundancy package anyway. On the other hand, if an illness or injury prevents you from working, MPPI may be very much needed. Even if you expect a large payout, this might not necessarily occur, and statutory redundancy funds may not be adequate to meet your needs.
Alternatively, you may be confident of your eligibility for support from the Government in the event of inability to keep up with your mortgage payments, however you will need to meet certain conditions for help, and the Government won’t pay anything more than your interest. By contrast, an MPPI policy can cover your full repayment and associated costs.
It’s also important to ask yourself whether you may already be adequately covered by another policy that you have taken out. You may have permanent health insurance, for example, that pays out a percentage of your salary if you are unable to work because of illness or injury. But if such a policy doesn’t cover you in case of losing your job as well, you could always invest in unemployment-only MPPI to plug the gap.
Finally, some employers also provide their workers with some form of cover that overlaps with mortgage payment protection insurance, so this is something else you might want to check before requesting an MPPI quote.
Talk to the LifeSearch team today about your options
When you are considering how you can protect yourself in the event of suddenly becoming unable to meet your mortgage repayment obligations, it isn’t just different types of MPPI policy that you will need to think about, but also alternative forms of insurance that could serve similar needs.
You might consider income protection cover, which may pay out for a longer period than mortgage insurance, such as until retirement or whenever you are able to return to work. Critical illness cover may also interest you due to the lump sum it would give you if you are diagnosed with a serious illness; however, it doesn’t provide a regular income.
Contact LifeSearch to discuss your requirements with us in greater detail or to ask for a competitive quote for MPPI or any of the similar products we can provide.