Mortgage Protection Insurance

Mortgage protection insurance is often referred to as MPPI. Cover is not compulsory, although it can be a condition of some loans. It is a policy which should be considered by everyone with a mortgage.

For whose who might have stretched financially with their mortgage, mortgage protection insurance is likely to be even more important in the event of unforeseen accident, sickness or unemployment.

The state benefits to cover your mortgage in the event of losing your income are limited and they are means tested. If you have any savings you would be expected to use these first before the State steps in, even then you can expect to wait a considerable time before you see any payout.

Finding the best price with any insurance is the same, you must have a good basic knowledge of what is available and ensure you shop around.

Browsing the web will give you a good grounding, understanding the main provider, their products and what is and isn't included in a policy. By requesting quotes from a range or insurers you ensure a competitive price.

Underwriting can vary from insurer to insurer which means one may well look upon you more favourably than another in turn offering you better rates.

For information regarding the regulation of the insurance market visit the Financial Services Authority website.

The FSA also provide a site to help consumers with money and insurance matters, an overview of income protection insurance can be found in their insurance section.

Mortgage protection cover can offer you the peace of mind knowing your monthly mortgage repayments are being looked after should you be unable to work to due to accident, sickness or unemployment.

Like with many other personal insurance policies mortgage protection rates are dependant on a number of personal factors and cover options available. Personal factors which the insurers consider include your age and whether you smoke.

With increasing age comes the increased likelihood of being rendered unable to work. Insurers take this into account when quoting and thus the older you are the more expensive your premiums.

Most insurers deem any person who has smoked tobacco in the past 12 months as a smoker and in turn quote inflated premiums to account for the additional risk.

We all end up considering our financial protection at some stage in our lives however for most it takes a life changing event, whether it is a new house or bringing a new person into the world.

When considering the amount of cover you require you can take into account any bills relating to your mortgage. A good mortgage protection plan will cover up to 125% of your monthly mortgage payments.

You can choose the length of cover you wish to receive monthly payments for should you need to claim on your plan. At the outset of you will need to decide whether you want 12 months of cover or 24 months.

The longer the period for which the mortgage protection insurance pays out the more expensive the premiums will be.

Mortgage protection cover can be set up to cover either an individual or a couple. A joint mortgage protection plan will tend to allocate a proportion of the cover to each person on the plan say 50/50 or 60/40.

If one person needs to claim, then the amount of the benefit received will be the proportion of the mortgage protection insurance allocated to that person.

It is also possible to allocate the MPPI on a 100/100 basis, thus both individuals on the joint plan would receive the full payment in the event they need to claim. This type of arrangement will incur higher premiums due to the additional cover.

The period from when you are initially off from work during which the mortgage protection insurance will not pay you to your first payment.

Mortgage protection policies can vary the deferred period, ranging from as little as 4 weeks up to 26 weeks, longer the deferred period, the cheaper the premiums.

Firstly to claim on the unemployment part of the mortgage protection cover typically you must have been employed continuously by the same company for at least the last 6 months on a permanent contract.

Mortgage protection cover won't pay if you are off work because of a medical condition you knew about, whether diagnosed by a doctor or not at the commmencement of the policy, or for a medical condition that persists or returns in the first 12 months of the protection plan.

It will not pay out for pregnancy unless there are medical complications. Most plans will not cover stress or back related injuries - two of the most common reason for workers to be off work.

The cover will not pay if you lose your job through resignation, take voluntary redundancy or are dismissed for misconduct, or if you cannot work as the result of an illegal activity. If you are made redundant involuntarily, you will have to be claiming Job Seekers Allowance to get a payout from mortgage protection insurance plan.

Finally, the plan will not pay out if you are made umemployed within the first 60 days of the plan being taken out.

Mortgage protection insurance is designed to cover the financial obligation your mortgage presents for a short time period of 12-24 months, should you lose your income due to accident, sickness or unemployment.

If you are looking for a policy which would protect a proportion of your income rather than a specific debt for a longer time period then income protection insurance might be an alternative worth considering.