Mortgage payment protection insurance (MPPI) is something that not many people really understand. However, many people buy it every year along with their mortgage because they think it will give them the money they need to keep their roof over their heads if they lose their job. Most of the time, it can do this, but there are exceptions that mean you might not be able to claim. If you don't know about these and haven't read the fine print to make sure your situation qualifies you to make a claim, your insurance could be a waste of money.
Mortgage payment protection insurance can work, but you need to know what you are getting and what it can and can't do before you buy it. You might not be able to make a claim if you only work part-time, are retired, are self-employed, or had a medical condition before you bought the policy. Policies are different, and while these are the most common, there may be others listed in the fine print, so it's important to read them from top to bottom.
If a policy is right for you, it would start giving you the tax-free amount you agreed to when you got your quote. This amount was based on your age and the amount you need each month to make sure you can keep paying your mortgage. Before the policy kicks in, you do have to be out of work for a certain amount of time. This varies from provider to provider, but is usually between the 31st and 90th day of being out of work. Once the policy starts paying out, it will keep doing so for another 12 to 24 months. This gives you plenty of time to heal and get back to work without having to worry about how to pay your mortgage each month.
Some of the biggest problems with mortgage payment protection insurance have been the lack of information about what isn't covered, how much the insurance will cost in total over the life of the loan, and how much the premiums are. High street lenders charge way too much for the insurance, which can make the mortgage cost hundreds of dollars more than it should if you went with a specialist provider. The standalone provider will not only save you a lot on monthly premiums and the total cost of the coverage, but they will also give you all the information you need to make sure a policy is right for your needs before you buy it. This means you can make an informed decision about whether or not the policy is right for you before you buy it.
One of the biggest changes that will happen because of the Financial Services Authority's investigation, which began in 2005 after the Citizens Advice made a very strong complaint to the Office of Fair Trading, is that comparison charts will be put in place in March 2008. After answering a few questions about policies, the consumer will be able to use the charts to make an informed choice. The charts will also show how much the coverage will cost and point out any exceptions, which is something that is clearly missing at the moment.
Mortgage payment protection insurance needs to be understood, and right now, the only way to get the information you need to figure out if a policy is right for you is to talk to an honest payment protection specialist.
