Mortgage Payment Protection Insurance Needs Careful Consideration

By Simon Burgess

Mortgage payment protection insurance (MPPI) can give enormous
benefits especially when it comes to giving peace of mind, but
it is not suitable for all individuals. For those who are
eligible to claim against a policy then it would mean a tax free
monthly income with which to continue meeting your mortgage
repayments each month for between 12 – 24 months depending on
the provider.

Polices will usually give you an income from anywhere between
day 31 and 90 of being continually unable to work due to
unforeseen redundancy, ongoing illness or accident that prevents
you from working. As with all insurance, mortgage payment
protection has exclusions some of which are to be found in the
majority of policies and others which can be added by the
provider.

Typically, individuals who are self-employed, suffering an
ongoing illness, are retired or who are only working on a part
time basis would not benefit from taking out cover. You have to
read the terms and conditions over thoroughly before committing
yourself to a mortgage payment protection insurance policy and
talk to your provider so you will get access to the information
needed.

The Mortgage payment protection insurance can provide
invaluable cover but only if the individual understands it and
ensures that it is right for their circumstances. An ethical
specialist will provide the information needed to determine it
is suitable, but in the end it is down to those buying the
protection to make sure that they would be eligible to claim.

Faith has been lost in the product - along with the family of
protection suites - since it was highlighted in the media that
mortgage payment protection insurance policies were being
mis-sold. In 2005 the investigation into the sector began after
a super complaint from the Citizens Advice to the Office of Fair
Trading. The Financial Services Authority began their own study
in to the market place too, which is currently ongoing and they
handed out fines to several well known names on the high street.

The independent body the Competition Commission are now
reviewing the protection insurance industry and it is
anticipated that their findings will be released early in 2009.

Despite recommendations set out for changes that needed to be
made when it came to selling a policy, in 2007 over 4,000 cases
were investigated for mis-selling. At the moment around 70,000
payment protection policy holders are seeking compensation for
being mis-sold their policy and it is thought that around half
of the 20 million policies that have been taken out could have
been mis-sold.

Reading the conditions set out in the mortgage payment
protection insurance is very essential if you want to be able to
claim. In all fairness mortgage insurance does fair better than
payment protection has with the majority claims being paid out.
Regardless of this those considering taking out cover do have to
be on their toes when it comes to buying their policy. A
standalone provider will offer a quality product that offers
value for money and all the information needed to determine its
suitability.

About the Author: Simon Burgess is Managing Director of the
award-winning British Insurance
(http://www.britishinsurance.com), a specialist provider of low
cost income payment protection insurance (PPI), mortgage payment
protection insurance (MPPI) and loan payment protection
insurance.