Mortgages are a long-term financial commitment. You must continue to make the monthly payments for the entire term of the mortgage. It will be over many years, but no one can predict how your financial situation will change. This is a huge risk.
Mortgage Payment Protection Insurance (MPPI), is one of many valuable insurances that you can use to lower your risk and protect your family’s financial health. MPPI’s purpose is to make sure you have enough income to pay your mortgage payments even if you are unable to work due to illness, accident, or unemployment.
The Top Tips
o Some mortgage lenders might try to get you to take out an MPPI policy with your mortgage. You should find out what the monthly cost of MPPI coverage is. Get some quotes online and start comparing. The Internet can save you up to 60%, according to most people.
o Only mortgage lenders will quote you the amount you require to cover your monthly mortgage payments. The author suggests that you add to your coverage the cost for your home and contents insurance, your mortgage life insurance, as well as any investment plans you have made to repay your mortgage. (The investment plan is only applicable to mortgages where you only pay the interest each month, but you will repay the capital at the end).
MPPI can be taken out at any time. Many people mistakenly believe you can only get MPPI if you have arranged the mortgage.
An MPPI policy will not cover casual work or seasonal employment. Exclusions are a part of every policy. Casual work and seasonal work are examples. These are the conditions under which a claim can be denied. Before you sign up for the policy, make sure you read the exclusions. If you are unable to file a claim due to your circumstances, you should cancel the insurance. MPPI policies may exclude 50% of possible claims.
o Not always the best, but the cheapest policy is often the best. Don’t choose the cheapest policy. Policies pay out in different circumstances. Be sure to carefully review them. The policy exclusions, coverage provided, and general pricing policies will all affect the premium.
There are many other names for MPPIs. So don’t get confused. You can also call it Payment Care, Accident Sickness and unemployed insurance, or Payment Cover. They are basically the same, but be sure to review the exclusions.
o Many MPPI policies require that you are off work for a certain period of time before you can claim. While 60 days is the longest you will find, many policies allow for a shorter period. Some policies will backdate the payment to when you last worked. Pay attention to the Terms and Conditions of the policy. These Terms and Conditions should be reviewed before you purchase. Also, remember to compare prices like for like.
o Do not confuse Mortgage Payment Protection Insurance (MIG), with Mortgage Indemnity insurance (MIG). MIG provides insurance coverage for lenders for losses that might result from a property they have mortgaged being sold at a lower price than the amount of the outstanding mortgage. MIG policies pay the lender all payments, not you.
o Permanent Health Insurance may be sufficient to cover MPPI. You can review the terms of your PHI policy to determine if MPPI adds anything.
You may already have Critical Illness Insurance. However, there is a possibility of MPPI being duplicated. MPPI will pay income for any illness that disables you from working during your insured period. If you have one of the chronic diseases listed on your critical illness policy, Critical illness Insurance will pay a lump sum. Other conditions may apply. If you have a valid claim under a critical illness policy, your MPPI policy will likely also cover you. Your MPPI policy will only pay if your chronic illness is not on the list.
o Shop around. The Internet is the best place to buy MPPI. Many web sites allow you to order cover online immediately.
The best part is that you don’t have to pay any taxes if your income is claimed!