MPPI Otherwise Known as Mortgage Payment Protection Insurance

Mortgage payment protection insurance or MPPI is a very valuable form of protection to take out if you are repaying a mortgage over many years and are in full time employment. You pay a premium to the provider each month and then if you should find yourself a victim of unemployment or incapacity you could claim on the insurance.

The amount you would have to pay for you cover varies with the provider and on different factors. How much of your mortgage repayment you want to protect will be taken into account as will the level of protection. Some providers will also base the premium on how old you are and this allows even first time younger home buyers who have pushed their budget to the limit, to cover the commitment of their mortgage. You are able to protect accident, sickness and unemployment together, unemployment only or incapacity only.

You would have to wait the period of time set out in the terms of the MPPI policy before you are able to put in a claim on the policy. Some providers will backdate it to the first day of you becoming unemployed or of being incapacitated but you have to check this in the terms and conditions. Once the cover has started it would continue to payout your income for between 12 and 24 months again dependent on the provider and then it would simply cease. During this time you would not have to worry about finding the money and would be able to continue paying the repayments of your mortgage and concentrate on getting well or of finding work.

It is essential to protect the roof over your head as even one missed repayment would have the lender sending out a letter wanting to know when you are able to catch up. If you cannot catch up and continue to miss payments then it is almost certain that you will be facing having your home repossessed by the lender.

Relying on benefits from the State could be futile as while you may be eligible to receive help from them, it would only be towards the interest part of the mortgage and even then only up to a certain amount. The amount of help you are entitled to would be determined by many factors, whereas with mortgage payment protection insurance you can insure up to an amount that you determine.

While MPPI along with the rest of the family of payment protection policies has in the past earned themselves a bad name, it is not the product that deserves blame. Problems did appear in the sector but it was high street lenders failing to give out the correct information when policies were sold that led to the majority of problems. As long as you have checked in the terms and conditions that a policy is suitable then it can work in the way it was designed to work. Sticking with an independent specialist provider is essential as they will give you all the information needed for you to ensure that a policy would be suitable.

Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of MPPI.