Mortgage Payment Protection Insurance (MPPI)




What is it?

Mortgage payment protection insurance will protect your mortgage payments if you are unable to work due to ill health or accident or if you are made redundant. They pay out a set amount or percentage of the normal monthly payment for a set period, typically 12 months.

The cost of mortgage payment protection insurance policies vary depending on the level of cover, and can cost from between 4.50 to 5.50 per 100 of cover. So, say your monthly mortgage payment was 400, and that the insurance cost 5 per 100 of cover, the mortgage protection insurance would be 20 per month. Cost can be affected by the quality of the policy, and not all policies are the same, making it important to read the small print and any exclusions.

In the event of unemployment or illness, government help towards mortgage payments is means tested. If you have more than 8,000 in savings you will receive nothing. If you are lucky enough to obtain assistance, the Government will only pay your mortgage interest, and if you took your mortgage out after October 1995 there is no help for the first nine months of unemployment or disability.

Whether you actually need Mortgage Payment Protection Insurance or not will depend on your personal circumstances; the type of job and what savings you have will determine the extent of your risk.

Types of Cover

There are 2 types of cover available, accident and sickness and accident, sickness and unemployment and as you might expect, it gets more expensive with the more things that you want cover for and for the length of payout.

Please remember to disclose everything when you apply to ensure that your policy isn't void if you ever need it. Typically, if you have a pre-existing illness prior to taking the policy out which would stop you from working then that could void your policy. Similarly, if you knew that you were about to be made reduntant prior to taking the policy out, then this could void it too.