Unfortunately, not many people understand mortgage payment protection insurance (MPPI). Yet each year, many people buy it along with their mortgage believing that it will provide the income they need to cover their expenses. Although it is usually able to do so in most cases, there are some exclusions that could make it difficult for you to claim. These exclusions can make your insurance coverage useless if you don’t know about them and have reviewed the fine print to ensure your situation permits you to file a claim.
Although mortgage payment protection insurance is possible, it is important to understand what you are purchasing and what the policy cannot do. You may not be eligible to claim if you work part-time, are under retirement age, are self-employed, or have a pre-existing condition. There are many policies, and although these are the most popular, you will find other reasons in the policy’s small print. It is important to fully read the policy.
If the policy suits your needs, it will give you the tax-free amount you agreed to at the time you got your quote. This was based on how old you are and how much you need each month to be able to continue servicing your mortgage payments. The policy will only kick in if you are out of work for a certain period. This can vary between providers, but it is generally anywhere from the 31st to the 90th day of being out of employment. The policy would pay for 12 to 24 months after it kicks in. This gives you plenty of time to recuperate and get back to work, without having to worry about finding the monthly mortgage money.
The lack of information about exclusions, the total cost of coverage over the term of the mortgage, and the high premiums are some of the most significant problems in mortgage payment protection insurance. High street lenders can charge astronomical amounts for this coverage, which can increase the mortgage cost by hundreds of dollars. A standalone provider can save you money on your monthly premiums and the total amount that you pay for the coverage. This allows you to make informed decisions about the suitability of the policy.
The planned introduction of comparison charts, which was announced in March 2008 by the Financial Services Authority in the wake of a super complaint to the Office of Fair Trading by Citizens Advice in 2005, is one of the most significant changes that have resulted from the investigation. After answering a series of questions about policies, the charts will enable the consumer to make an informed choice. It will also show how much coverage will cost.
It is important to understand mortgage payment protection insurance. To determine if a policy suits your needs, you need to speak with an ethics specialist in payment protection.
