Mortgage Payment Protection Insurance The Do s And Don ts
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Mortgage Payment Protection Insurance: Key Tips and Considerations
Summary
When you take out a mortgage, you're committing to monthly payments over many years, without knowing how your circumstances might change. Mortgage Payment Protection Insurance (MPPI) can help mitigate this risk by covering your payments if you face unemployment, illness, or an accident.
Understanding Mortgage Payment Protection Insurance (MPPI)
MPPI is designed to ensure your mortgage payments continue during periods when you're unable to work due to accident, sickness, or unemployment. Consider the following risks that this insurance addresses:
- Approximately 90 home repossessions occur daily, mostly due to financial issues linked to unemployment.
- Around one-third of people aged 25-34 have faced unemployment lasting over a month.
- Most people experience at least one extended period of illness or recovery from an accident during their mortgage term, keeping them off work for over three months.
If you have a standard repayment mortgage, it's wise to align your monthly MPPI coverage with your mortgage payments, life insurance, and home & contents premiums. For interest-only mortgages, include the cost of your investment plan. Remember, MPPI payouts are tax-free!
11 Essential Tips for Buying MPPI
1. Flexible Timing: You can purchase MPPI at any point, not just when you arrange your mortgage.
2. Shop Smart: Some mortgage lenders may pressure you to buy MPPI from them. Compare prices online to find savings of up to 60%.
3. Comprehensive Coverage: Lenders often quote for coverage solely for your mortgage payments. Consider including costs for life insurance, home & contents insurance, and any investment plans.
4. Understand Exclusions: Seasonal or casual workers may not be eligible for claims. Review policy exclusions thoroughly to ensure you can make valid claims.
5. Evaluate Policies Carefully: Don't pick the cheapest MPPI blindly. Conditions vary; check coverage details and exclusions before deciding.
6. Terminology Clarity: MPPI goes by various names like Accident, Sickness, and Unemployment Insurance. They're similar, but always review exclusions.
7. Claim Conditions: Most policies require a certain period off work before claiming. Some backdate payments to the first day off work. Check the Terms and Conditions for specifics.
8. Avoid Confusion with MIG: Mortgage Indemnity Insurance (MIG) protects the lender, covering losses if a property sells for less than the loan amount. It doesn't benefit you.
9. Review Existing Coverage: If you have Permanent Health Insurance, you might not need MPPI. Compare your policies.
10. Critical Illness Comparisons: Both MPPI and Critical Illness Insurance have overlapping benefits. MPPI provides income when you're unable to work; Critical Illness pays a lump sum for chronic conditions. Ensure you understand what each covers.
11. Search Smart Online: Use specific search terms like "mortgage payment protection insurance" to find targeted results, and explore online options for cost savings.
By taking these steps, you can effectively manage the financial risks associated with unexpected life changes, ensuring peace of mind for you and your family.
You can find the original non-AI version of this article here: Mortgage Payment Protection Insurance The Do s And Don ts.
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