MPPI simply stands for Mortgage Payment Protection Insurance (often referred to as cover)
This simply insures you that if you are unable to pay your mortgage because of illness, accident or redundancy you will be able to get your mortgage paid by your insurers.
Usually MPPI policies will not offer unlimited cover if you have to claim. Payments will be made for a period of time and during that time you will have to continue to pay your MPPI premiums. Policies vary in terms of how long they will pay out, but it tends to be for a year or sometimes up to 2 years. Policies offering more protection are available but they will result in higher premiums being paid.
Policies often have various levels of cover. So you could choose to take out a policy that only covers you for a serious illness, or losing your job, or both, but the higher the level of cover, the more you will have to pay in terms of premiums.
It is standard practice to have exclusion periods when you first take out the policy, so if you lose your job within 30 days of taking out the policy you will not be able to receive any payments. Exclusion periods vary but tend to be between 30 and 90 days of taking out the policy. However some are available that will offer you protection right from the day you took out the policy with no exclusion period, but these are less standard.
It is really important that you look at all the details of the policy before you sign up to it. If you have a pre existing condition such as mental health problems, stress or depression then you will not usually be covered. Illnesses such as HIV, addiction or pregnancy related illnesses are also usually excluded.
MPPI: Shop Around
Your mortgage lender will probably offer you an MPPI policy, but you should be aware that this may be an expensive option. You will probably find a better deal simply by shopping around (especially on the internet) or through going to a specific MPPI company.
Usually premiums are offered at a percentage of each £100 which you would receive in benefits. So the more expensive the mortgage is, the more you will have to pay in the form of premiums.
The cost of premiums is also variable according to the specific type of cover that you are looking for. If you want complete protection in terms of illness, accident, unemployment etc then you will pay significantly higher premiums than if you were taking out insurance to cover unemployment only.
Always bear in mind that MPPI will only cover the cost of your mortgage payments. If you think about all the bills that you would have to pay each month if you did become ill or you lost your job, then it may be worth thinking about some extra insurance. Income protection policies do just that; protect your income, so if the worst happens your income will be protected and these policies are not linked to a mortgage, so you can carry on with the policy even if you change your mortgage!