Six reasons to consider this insurance
A Guide to Mortgage Protection Insurance
Mortgage protection insurance, also known as mortgage payment protection insurance (MPPI), is one of three types of insurance coverage that falls under an umbrella of products known as mortgage protection insurance. It is a short-term product that pays benefits over a 12 to 24 month period to people faced with involuntary redundancy, temporary illness, or accident. Benefit eligibility kicks in from 30 to 90 days after coverage initiation with most plans. The other two insurance protections that make up the payment cover portfolio include income payment protection and loan payment protection. All three offer the same basic benefits and plans, with some moderate differences in terms of purposes, allowances, and extra benefits.
Mortgage Protection Insurance is designed to offer short-term mortgage payment assistance to people out of work for any of the covered events. Many Brits rely on this insurance to sustain their mortgage payments and homes in the event of lost income. Mortgage protection insurance cover usually covers the full monthly mortgage payment up to the insurers own limits. Many borrowers buy the protection in combination with their mortgages. This packaging of products has been common among large banks and High Street lenders for some time, which has created some controversy at times due to the often high price charged and lack of information provided at the point of sale. .
Loan payment protection, another of the payment cover products, has many of the same characteristics that the mortgage protection insurance has. Its purpose is a bit broader, as it offers payment up to 100 per cent of monthly debt obligations, as long with a provision of up to 25 per cent of monthly income for expenses – again up to the insurer's limits.
As with the mortgage protection insurance, loan payment cover is often sold in combination with various loan products.
Income payment protection is perhaps the simplest of the three insurance protection products to understand. There is some confusion between income payment cover and income protection, a product with similar names and terminology, but quite different benefits. Income payment protection is intended to provide monthly income support to sustain the insured over the 12 to 24 month payout period. Income protection is more of a long-term, higher cost protection that pays benefits up to retirement for some people. Income payment insurance offers an allowable coverage amount that is a bit lower than the other payment products, as it typically offers a maximum of 50 per cent of normal income.
Currently, only about one in three Brits maintains a mortgage protection insurance policy. Consumer awareness has been growing for various reasons, however, which has lead to an increase in new homeowners obtaining one of the protections. This increase in consumer familiarity with the products stems from negative publicity regarding mis-selling practices within the industry. As leading banks and High Street lenders, along with some more recent online lenders, have faced scrutiny for their business practices, consumers have become more educated about mortgage protection and insurance broker benefits.
The Citizen's Advice, a leading consumer advocate group, filed a super complaint on behalf of consumers with the Office of Fair Trading (OFT) in 2005. It alleged that many insurance sellers have been engaging in mis-selling tactics putting consumers at a disadvantage. Some mortgage protection insurers have been selling the payment protection products to retired people, unemployed people, and people with pre-existing medical conditions, all of whom are ineligible to receive benefits from the plans.
Mortgage Protection Insurance – Quote and Apply
Much of the charges were related to the packaging of mortgage protection insurance and loan products, however. Many institutional lenders have long sold payment cover with their loan products. On its own, this is not wrong. However, selling practices that involved high pressure selling or deceptive selling have been called into question. Lenders sometimes imply to borrowers that they must buy the mortgage protection insurance in order to get a favourable mortgage. Others have more unethically built expensive premiums into loan repayment costs to hide the separate costs of the insurance from the borrower. These are both disadvantages to open communication of customer benefits.
As a result of the complaints, the OFT and the Financial Services Authority (FSA) both conducted investigations of the payment protection industry. The FSA has imposed severe fines and sanctions against some offenders, typically well known names on the High Street as opposed to standalone providers. The OFT has appointed the Competition Commission to further investigate the industry. The most important result of the process has been renewed focus on the benefits of the insurance and the availability of low cost premiums from independent standalone mortgage protection insurance providers. The results of their review are anticipated early in 2009.
Mortgage Protection Insurance – Apply Online
Independent insurance standalone mortgage protection insurance providers typically offer payment protection insurance products at a 40 to 80 per cent discount of what is available through banks and High Street lenders. This premium savings presents much greater value from the insurance to customers. Customer can quickly visit a specialist web site, complete a questionnaire, and gain access to the wide variety of providers and mortgage protection insurance products the provider has access to. Most standalone providers maintain relationships with leading insurerss and get the best rates available. They advocate for consumers in order to offer them the best value in payment cover.
Short-term unemployment assistance is an individual responsibility for Brits. It is a mistake to rely on the State for financial support during unemployment. The State offers very little to no assistance in most cases. Consumers must protect themselves. With the low cost Mortgage Protection Insurance, income payment protection insurance, and loan payment protection insurance available through standalone providers, there is no reason Brits should not make themselves secure during accident, illness, or involuntary redundancy periods. The key is for consumers to look out for deceptive lenders and read the fine print of loan products. Borrowers have the right to ask questions about what they are paying for in terms of repayment costs. Historically, standalone mortgage protection insurance providers usually offer the most reputable products and services.
