Mortgage Payment Protection
What is Mortgage Payment Protection Insurance?
Mortgage Payment Protection Insurance (MPPI) also known as Accident Sickness and Unemployment Insurance (ASU). As its name suggests provides you an amount of monthly income in order to pay your mortgage payments and associated expenses, such as building and contents insurance, life cover etc... should you become ill, have an accident or be made redundant.
Why do you need Accident Sickness & Unemployment cover?
If you have arranged you mortgage after Oct 1995 under current DSS regulations you would not be eligible for any mortgage interest support from the government for a period of 9 months. Those that are eligible for help with their mortgage payments the DSS will only pay the interest element of your loan up to a loan amount of £200,000. If your partner works more than 16 hours per week you are unlikely to get any financial support from the DSS.
Its easy to see how quickly you can get into financial difficulty, even if you can access your savings, why should you when the cost of protecting your mortgage payments is so affordable. Mortgage Payment Protection has therefore been designed to provide you with temporary cover and will normally only pay the benefits out for a claim period of 12-months.
How much cover should I consider?
If you are self-employed you cannot claim under the redundancy part of your insurance if your business temporarily stops trading. Therefore we suggest that you cover your mortgage for Accident or Sickness only and leave out the unemployment element.
The total amount insured cannot be more than £2,000.
What other options are there?
As Accident Sickness & Unemployment cover only provides benefits for a limited time you may therefore want to consider protection that will pay your mortgage if you cannot work for over the longer term as the impact on your finances would be more severe. Permanent Health Insurance (PHI) can pay you an income until you return back to work or a pre selected age normally set to your retirement age 65.
However with PHI there are strict limits on the amount of cover that you may have and you must take into account any employer support, other cover you may have elsewhere and other sources of income to ensure there is no overlap in protection, otherwise you could end up paying for cover to start earlier than you need.
To get total protection you could combine Accident Sickness & Unemployment with Permanent Health Insurance.
Example 1: Accident Sickness & Unemployment cover (Cover for your mortgage for 12 months) longer term illness will then be covered by having Permanent Health Insurance to kick in after 12 months.
Example 2: Unemployment cover only (Cover for your mortgage for 12 months if made redundant) longer term illness will then be covered by having Permanent Health Insurance to kick in after 4 weeks, 13 weeks, 26 weeks or 52 weeks.
Those are just two examples there are many different combinations, which you could try to get the cover you need within your budget.
Please note: 3up2down are NOT regulated by the Financial Services Authority. All the insurance quotes and applications are provided by third party who we refer you to for competitive cover. Please be aware that responsibility under Financial Services Authority regulations will therefore be assumed directly by those companies and not 3up2down LLP on any insurance you may purchase.
