Mortgage Payment Protection Insurance
About MPPI
An MPPI policy pays your mortgage for you if you become
unable to work for an extended period of time, as a result
of redundancy, accident, sickness or disability. There are
also other payment protection policies that can be obtained
to cover credit card or loan repayments. If there is a reasonable
chance you will find yourself out of work in the future,
then this sort of policy can provide you with valuable financial
assistance.
An MPPI policy should provide enough income to cover all
your monthly mortgage expenses. If you have a repayment
mortgage, this should be your capital and interest repayment
and if you have an interest-only mortgage , the MPPI should
cover your interest payment as well as your normal monthly
contribution to the investment vehicle that will repay your
loan.
Most non-mortgage PPI products are taken out for a length
of time that corresponds to the life of the loan it is protecting.
Some people cover themselves for slightly less than the
loan period, in the assumption that they will somehow be
able to make the payments for a short time, even if they
lose their job. Only do this if you are absolutely sure
that you will be able to cover your payments. Mortgage PPI
is usually taken out for anything from one to five years
at which point you can reassess and decide whether to renew
the policy.
There is usually a deferral period - a length of time after
you are unable to work or make the claim before you can
start to receive insurance payouts. Typically this ranges
from 30 to 60 days, though for non-mortgage related products,
the deferral period can be as long as 90 or even 120 days.
