If you have any kind of mortgage loan something you need to unquestionably consider is some type of mortgage protection insurance plan, whether it be MPPI, critical illness cover or standard life insurance coverage. All these various kinds of cover give peace of mind should anything go terribly wrong, like losing your job, death or getting a severe illness.

Mortgage Payment Protection Insurance is also referred to as Accident, Sickness and Unemployment insurance (ASU). It’s an insurance policy intended to cover your mortgage payments should you suffer from illness or injury or in the event that you are made redundant which leaves you unable to work.

Generally, insurance policies last for between One and Five years, after which you can reassess your need to re-insure. Premiums, the price of which differs from insurance company to insurance company, are paid monthly. Generally the cost of premiums falls between £3.00 and £5.00 per £100.00 of monthly mortgage repayments. It makes sense to look around, however, because the insurance deals connected to home loans by some traditional lenders aren’t necessarily good value for money.

MPPI enables you to cover either a part or all your monthly repayment and you may be surprised to find that the majority of policies of this sort will only provide cover for around 1 year. To be eligible for MPPI you generally need to be aged between 18 and 65 (although several lenders have a cut-off age of 63). You should be the owner-occupier of the property or home and have been in continuous employment (including self employment) for Six months when you apply. You’ll also need to choose an ‘excess period’. This is the time period which runs from whenever you become not able to work to when the plan begins to pay out and is usually from 3 to 9 months.

Two important points to remember – firstly, if you are aware of impending redundancy when you apply for MPPI and later make a claim against your insurance policy, your insurer will not honour the policy if they discover that you knew that your situation would change at the time you took out your coverage.

Second, although it’s not hard to believe that you’re immune from issues (otherwise known as the ‘it can’t happen to me’ syndrome), remortgaging your home is a big responsibility. In the worst situation, you can lose your property if you fall behind with your payments, so some form of protection for your largest monetary asset may pay off in the long run.

The InterSIPPs.co.uk finance site tells you everything you need to know about SIPPs.
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