A Guide to Mortgage Payment Protection Insurance (MPPI)

1. What is Mortgage Payment Protection Insurance?

Simply put, Mortgage Payment protection Insurance (MPPI) provides a cash amount equivalent to your monthly mortgage costs, which would be payable one month after your income stops as a result of accident, sickness or redundancy. Typically, the cover would continue for a period of 12 months and can be used to cover both capital and interest elements of your mortgage payment as well as premiums for household insurance and endowment policies. Mortgage Payment Protection Insurance should not be confused with Mortgage Protection Insurance, a term which is often used to describe life insurance taken out to protect a mortgage.

2. Why take out MPPI cover?

For most people, a mortgage represents the single biggest commitment of their lives and being able to maintain the monthly mortgage cost is pivotal to their family’s security. Repossessions are at a record level and if you suddenly found yourself unable to work as a result of accident, sickness or redundancy would you be able to afford to pay your mortgage? Even if you have savings, would you really want to use them, not knowing what the future holds and when you would start earning again. It is widely accepted that any help from the "state" is extremely limited; with recipients firstly being means tested and expected to use their own savings before they receive any payment. State payments can then take up to 9 months before they are paid to the recipient.

3. How much does the cover cost?

The cost can vary greatly and in the past customers have tended to take out the cover with the loan provider. But probably the best way to purchase this cover is as a "stand alone product" and premiums can be as low as £2.50 per £100 of mortgage payment. Premiums are not dependent on factors such as age or smoking/drinking habits so the cost can be surprisingly affordable to all.

4. Take Advice

This guide is published for information only and no part of it should be construed as financial advice or recommendation. Before taking out any form of insurance or protection cover, we suggest that you speak to an FSA Authorised and Regulated financial advisor who can explain the cover in more detail and recommend the most suitable product for your requirements.