Six reasons to consider this insurance
A Guide to Mortgage Protection
Mortgage protection is protection against the loss of a home in the event of a job loss. Many Brits rely on this insurance, commonly known as mortgage payment protection insurance (MPPI), to help cover their monthly mortgage obligation in the event of unemployment. Typical mortgage payment protection plans cover prolonged illness, accident, and involuntary redundancy. The Mortgage protection cover is designed to be a short-term assistance product as it offers benefits paid monthly over the course of a 12 to 24 month period. There is usually a 30 to 90 day wait following coverage initiation before benefit eligibility begins.
Benefits for mortgage protection insurance typically top out at 50 per cent of standard monthly income, or 1,500 pounds, for the insured. For many Brits, mortgage payment protection insurance offers security against repossession of their homes that could occur if they are unable to meet the monthly payment obligations. Mortgage payment protection insurance helps many meet this monthly obligation. Many banks and lenders sell mortgage payment protection cover in combination with mortgage products when they are sold to borrowers.
Mortgage protection is actually one of three types of insurance cover that make up an umbrella of products known as payment protection insurance (PPI). All three have similar characteristics in terms of the core insurance covers and benefits. There are some differences in their purposes and plan layouts. Loan payment cover is another of the payment insurance products. It is similar to mortgage payment protection insurance in many ways, but is a little broader in scope and benefits.
Loan payment protection also typically has a maximum cover of up to 50 per cent of monthly income, or 1,500 pounds. Loan payment is intended to help cover up to 100 per cent of monthly debt obligations.
A third type of payment protection insurance that is a little simpler to understand, at least on the surface, is income payment cover. Income payment protection insurance offers a replacement income (up to a set limit) that the policyholder can sue as they wish, whether it be for rent or mortgage or even clothing or fuel. Again, this has the same core benefits and covers offered by the other payment covers, with some slight differences. Income payment cover is simply designed to support consumers who rely on monthly job income for expense needs. Coverage is typically available for up to 50 per cent of the normal monthly income. The one confusing feature of the protection is actually more related to its name. Income payment insurance is often confused with income protection because their names and terms are commonly intertwined. However, the income payment cover is a short-term protection. Income insurance is a longer-term, higher priced insurance that pays benefits up to retirement in some situations.
Mortgage Protection – Quote and apply
This packaging of loans and mortgages by banks and High Street lenders has actually been the source of consumer outcries of mis-selling. Packaging of the products alone is not a problem. Unfortunately, some institutions, and more recently, some online lenders, have used pushy or deceptive selling methods to sell expensive insurance. Some lenders give borrowers the impression they cannot have a specific loan or mortgage without taking on the insurance premium as well. Others have more unethically added the premiums into the loan or mortgage repayment costs to hide the expensive premiums. Unsuspecting borrowers simply look at the total repayment and monthly obligation and do not realise there may be lots of unnecessary expense spread out over the repayment period.
Some mortgage protection insurance sellers have even sold payment insurances to part time employees, retired people, and people with pre-existing medical conditions. All of these groups of people are ineligible to receive benefits from the cover. Most plans require that insured people are full time employees at the time of coverage. They also include exclusions for pre-existing conditions that lead to covered events.
Citizen's advice, the consumer group actually filed a super complaint on behalf of British consumers in 2005. The Office of Fair Trading (OFT) and Financial Services Authority (FSA) both responded by conducting investigations into the payment protection insurance industry. The FSA concluded their investigation by fining and imposing sanctions on companies it felt had engaged in mis-selling.
Mortgage protection – Apply online
As a result of the investigations, consumers have become more aware of the mis-selling practices which have contributed to a reduction in banks and High Street lenders using them. Some consumer watch groups are now advising borrowers to beware of online lenders who have picked up the questionable selling practices. Along with heightened consumer awareness, another big benefit of the publicity in the payment protection insurance industry has been the rise of the independent broker. Consumers have recognised that an insurance specialist that is focused on servicing the specific product category can offer better services and better rates. In fact, some standalone mortgage protection providers have rates at 40 to 80 per cent those typically offered by banks and High Street lenders.
The good news is that Brits are becoming more aware of the benefits of payment protection and mortgage protection insurance and are buying through an independent specialist. The percentage of covered Brits has gone up significantly as consumers have become more empowered to select appropriate cover and better rates. .
Consumers are starting to recognise they must take care of their own financial situation. The State does not offer much, if any, assistance for unemployment situations. People must consider their own financial needs and that of their family. With the low cost premiums available through independent providers, mortgage protection insurance, income payment cover, and loan protection are all great values in the current market. As with any insurance it is better to never receive benefits payout, but the security in knowing its available is great for peace of mind.
