Mortgage Protection Insurance (MPI) also called mortgage protection insurance or MPPI is simply life insurance that pays your mortgage if a certain effect, such as dying, disability or job loss comes. The cost of mortgage protection insurance depends on elements such as the sum of your mortgage and your age and health. For disability MPI, costs also vary depending on your business or occupation.
As the economic downturn continues to bite, UK families are turning to alternative ways of protecting their income as well as their homes. Mortgage Protection Insurance is one of those ways that has seen phenomenal growth in the last few months. But, with the increasing number of providers and different types of policies available, buying the right insurance can be extremely time taking and complicated. So, while you want to get a protection for your income and your home and going to buy a mortgage protection insurance policy, then you must have to take into consideration some tips to buy the right policy at the right time. These useful tips are given below:
Why take out this cover?
State benefits are poor compared to the actual cost of enduring for the average family or young couple living in the UK today. Just because you are not capable to work it does not mean your financial commitments are put on hold. Typically, mortgage, personal loan and credit card repayments will rapidly turn into red diamonds and place your credit worthiness at risk. This is one of the greatest concerns in the post credit crunch era. Trying to secure a re-mortgage deal with an impaired credit history is becoming a major challenge.
When to apply for MPI?
If you are a full time employee and there are no issues with redundancy at the moment, then this is the ideal time to buy this Mortgage Protection Insurance. You will then have the security of knowing you can call upon this insurance if things change for the worse. If your employer has made an announcement regarding major layoffs, you are probably too late to buy unemployment Mortgage Insurance.
What do you want to be covered for?
Mortgage Payment Protection and Lifestyle or Income Protection, both are very analogous. Nearly all of the providers will provide policies that compensate you for Accident and Sickness or Accident Sickness and Unemployment. Most people will only be interested in Unemployment cover in the mistaken belief that Accident and Sickness will not be an issue for them. Someone who is ill may have nowhere else to turn when their company sick pay scheme runs out and they cannot earn again until they are well.
How long could you afford to wait before you require claiming under your policy?
The longer the excess period, the more inexpensive the insurance will be. This will depend upon your current contract of employment and any company benefits you enjoy, particularly the generosity of the sick pay scheme that may allow up to 6 months off work at full or half pay.
Recognize what is available to you and what you should buy to fit your needs:-
This insurance is specially designed to cover the amount you pay for your mortgage monthly. You can usually top up the amount of up to 25% more to contribute to other household expenses. Premiums are very competitive and this probably shows just about the minimum level of protection for a couple/family if one wage earner is unable to work due to happening of certain events. It will meet most short term commitments; however an average family will almost certainly need to have some savings they can dip into after a few months.
Best Prices for mortgage protection insurance policy:-
The best rates are available online where Protection Insurance can be bought without supporting the price of supplying a telephone sales, broking or advice service to clients. Any individual who already has a monthly paid Payment Protection Insurance, perhaps related to a personal loan, will almost certainly find they can gain a substantial saving by cancelling this and buying the same story of protection on-line.
How to calculate the amount of coverage that you need?
Here is an example of Mortgage Payment Protection; it is a very simple calculation:
Average monthly cost of mortgage repayments: £700 plus (up to max) 25% for additional expenses: £175 = £75 benefit required.
If this is not enough to meet your needs, consider an Income Protection Policy.
What occurs if your application is not taken?
Applying for Mortgage Protection Insurance on-line is a great way to save money. However, given the current economic climate more people are being turned down for this type of insurance.
What happens if your circumstances/conditions change?
You might take another line of work, it may offer better advantages for sick pay but, as a young entrant, you will not qualify for redundancy terms. In this situation you will want to tailor your policy to your needs. Also, it is necessary to tell your Protection Insurance provider if you change your job so they understand your situation. There is every possibility you could save some premium if better employment terms enable you to increase the excess period on your policy
Which provider should you choose to purchase the policy?
Some policies look very cheap and low-cost, but are much restrained. Look for suppliers registered with the FSA, this means they are regulated, closely monitored and the underwriters must meet strict rules concerning their solvency to be allowed to sell in the UK. Money Saving Expert provides a sound source for researching Mortgage Payment Protection Insurance.