Mortgage Protection Insurance
Mortgage protection insurance is useful to have, although not always compulsory, due to the fact that it provides coverage for mortgage repayments in the case that you are unable to work or are made redundant.
MMPI, as it is more commonly referred to as, is one of the most common insurance policies associated with a mortgage, but some of the of the factors covered within the policy may also be covered in other mortgage insurance policies, so it is necessary to do some research to avoid paying twice for the same coverage.
Most of the time mortgage protection insurance is not a compulsory part of a loan, although depending on the banking institution it may be one of the conditions of the mortgage. This said, everyone who has a mortgage should consider taking the MMPI out because unforeseen circumstances can occur at any time.
Those that already are stretched financially or those that live paycheck to paycheck should take special note of mortgage protection insurance because in the case of unforeseen unemployment they will be hurt the most.
Although there are often different types of MMPI policies, the best types not only cover the mortgage payments, but also any bills that are tied in with the mortgage such as repayments and interest.
Another factor to look at when considering MMPI is how quickly it will start to pay out if you become unemployed. The better policies will start to pay out a month after you stop working due to redundancy or illness, and will continue to pay out anywhere from 12 months to 24 months. This time period is considered suitable for finding a new source of employment or to have recovered from an illness.
It is important to understand that most mortgage protection insurance policies include certain conditions in which it will not pay out, such as if you become ill from a medical condition you were aware of before the insurance was taken out, regardless of official diagnosis from a doctor. The policy also will not pay out if a woman becomes pregnant unless there are significant medical complications.
In terms of unemployment, a MMPI policy will not pay out if you are forced to leave your job from back related injuries or stress. Additionally, if you are dismissed for misconduct or illegal activities, resign from your job, or take voluntary redundancy the policy will not pay out. If the redundancy was not voluntarily, you will need to claim a Job Seekers Allowance to receive a payout from the MMPI policy.
You should also be aware that an MMPI will not pay out if you fall ill within the first year of the policy or become unemployed within the first sixty days of the policy initiation.
Most mortgage protection insurance policies are taken out along with a mortgage and are commonly sold from a mortgage lender, but it is often cheaper to purchase a policy from an independent provider who will offer more competitive rates.
