Mortgage Payment protection insurance or simply called MPPI is just one of a range of valuable insurances which includes critical illness insurance and life insurance, which you can use to minimize that risk and protect your family financially. The main purpose behind the mortgage payment protection insurance is to ensure that the homeowners have sufficient income to mortgage payment flow regardless he is off work for an extended period due to accident, sickness or unemployment. It can be a very useful while you have a mortgage obligation if you find yourself without an income after losing your job due to suffering from an illness, an accident or unemployment. So, if you are considering for policy to minimize the income risk relating to your mortgage, you must have to mull over some key factors given below:
Points to Be Remember While Considering Policy:-
- Always shop around your MPPI policy. Now days it is very easy to find the best policy, you will find that the internet is the cheapest place to shop for policy and websites in bulk enables you to arrange cover immediately online.
- You don’t need to confuse as the mortgage protection insurance is sold under a number of substituted names, such as Accident, Sickness and Unemployment Insurance, Payment Care and Payment Cover. Theoretically, they are the same – but don’t forget to check out the exclusions while taking.
- Mostly mortgage lender tries to coerce you into taking out protection insurance policy with your mortgage and if this happens, make sure you find out how much extra the Mortgage Payment Protection Insurance cover will cost you each month. Then get on the Internet and get some competitive quotations. It can cut your cost significantly.
- Most policies say that you must be off work for at least period before you can claim. The longest period you will find is 60 days, but many policies reduce this to 30 days. Some will then backdate the payment to the first day you were off work. Look out for the details which you’ll find in the policy’s Terms and Conditions. Always check these out before you buy the policy and remember to compare like with like when you’re comparing prices through different sources.
- Usually mortgage lenders will only quote for the amount of cover you need to meet your monthly mortgage repayments. Here you need to extend the cover to include the cost of your home & contents insurance, mortgage life insurance, and the cost of any investment plan you have arranged to repay your mortgage.
- Some people wrongly believe that you can only take out MPPI when you arrange the mortgage. There is no specific time to take the mortgage payment protection insurance. You can take out the policy at any time according to your circumstances.
- Remember, if you are a seasonal or casual employ then you will not be able to claim on a protection policy because every policy have some exclusions and seasonal and casual are two significant exclusions. The term exclusion means the circumstances under which a claim will be refused. Be sure to read these exclusions before you take out the policy and, if your circumstances mean that you’re unlikely to be able to make a valid claim, don’t buy the insurance! Exclusions on MPPI policies can eradicate 50% of potential claims.
- Don’t confuse Mortgage Payment Protection Insurance with Mortgage Indemnity Insurance. MIG provides insurance cover for a lender for any losses they might suffer as a result of a property on which they provided a mortgage being sold for less than the value of the outstanding mortgage. All payments under a MIG policy will go to your lender, not to you or your representative.
- If you have already taken out a permanent health insurance policy, then you may not need to take out MPPI. Check out the terms of your PHI policy and then make your mind up whether MPPI is adding anything extra.
- As regards the chronic illnesses, be aware about the level of duplication of your Critical Illness Insurance with MPPI. It will pay an income during the insured period for any illness that prevents you from working while the CII pays out a lump sum if you have any of the chronic illnesses listed on the critical illness policy. So if you have a valid claim under your critical illness policy, you will probably also have a valid claim under your MPPI policy. However, if the illness is not listed, then you have only MPPI payment.
Mortgage payment protection insurance is very essential to keep your mortgaged home safe and sound and your family away from the financial dangers. Remember that most policies will only pay out for a maximum of a year, so if you do have enough savings in place to tide you over for this length of time, then you may not require a cover. Also keep in consideration that the policies won’t usually allow claims related to unemployment within the first three or six months so make sure you have savings in place for this period.