Mortgage payment protection insurance (also known as MPPI) is designed to cover your monthly mortgage payments should you be unable to meet them due to accident, sickness or unemployment.
There are different levels of insurance cover available. You can choose to protect your mortgage repayments should you be unable to work due to accident or sickness.
The insurance can also protect you if you unexpectedly lose your job or have to leave your job to become a full time carer for a member of your immediate family.
This pays a benefit if you become unemployed or have to give up work to become a carer. Your policy documents will describe the definition of becoming unemployed or becoming a carer.
In general, unemployment means you have no paid work or temporary work and have a Jobseekers Agreement with the Department for Work and Pensions in the UK.
Please check the policy wording for full details of restrictions.
This pays a benefit if you are unable to work due to accident or sickness, as certified by a doctor. Some insurers will also cover you for extended periods of hospitalisation. Normal pregnancy or childbirth is not classified as accident or sickness and is not covered by this insurance.
Please check the policy wording for full details of restrictions.
This covers both of the above.
Unemployment-only cover is not available if you select a 180 day waiting period (please see Excess Periods section below).
An excess period is the number of days you are off work that you have to wait before your entitlement to benefit commences.
Different excess periods are available which determine how long you would need to be away from work before you would become eligible for payment. For example, 30 days excess would require you to be away from work for 30 days before you would become eligible and would wait a further 30 days before you receive your first payment.
Please refer to the policy wording for full description of excess periods or click here for further information.
The ‘benefit’ is the monthly amount that will be paid out in the event of a claim. Up to 25% of this amount can also be used to cover related expenses such as home or life insurance. The benefit can be up to £2,000 or 50% of your gross income – whichever is lower.
It is important that your mortgage cover does not exceed your mortgage commitments as the over-insured sum would not be paid in the event of a claim.
If you wish to cover more than just your mortgage, you may wish to consider income protection cover which will allow you to cover a percentage of your income which you can then use for any purpose.
Please note: This is a short term protection policy and payments are made up to a maximum of 12 months.
We calculate the cost of our payment protection insurance as a monthly cost for every £100 of monthly benefit. This number explains how much this insurance costs you each month for every £100 in benefit that you would receive each month if you made a successful claim for accident, sickness or unemployment.
For example, if the number is £5, this means that for every £5 that you pay as a monthly premium, you will get £100 for each full month that the claim lasts (after the waiting period on the policy). This number can be used to make comparisons with the cost of insurance from other providers. You should also compare the cover offered and the way in which the benefits are paid out.
A typical monthly cost for British Insurance Mortgage Payment Protection is £2.67 for every £100 of monthly benefit. This cost is based a 30 year-old looking to receive £1,000 a month from an accident, sickness and unemployment policy, opting for back to day one cover who will pay £26.70 a month with British Insurance. The monthly cost is inclusive of Insurance Premium Tax at the current rate.
This Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income.
For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk
Please note: This checklist is provided as an overview. It is important that you read the eligibility criteria you are presented with when completing an application.
To ensure you are eligible to take out a mortgage payment protection policy, you must confirm that the following statements apply:
Cover will automatically cease after you retire, when you reach state pension age, upon death or if you stop paying the premiums. Cover will also end when you reach the maximum age which may vary depending on the insurer. Please refer to the policy wording which is available once you have obtained a quote.
You must have a mortgage in place on your main residence
It is a requirement that you have lived permanently in the UK for at least six months and are in permanent employment, working at least 16 hours per week
You are only eligible for this cover if you have worked continuously for the past six months
You may not be covered for any pre-existing medical conditions or injuries as a result of an accident prior to the commencement of cover. Please ensure you understand the exclusions relating to pre-existing medical conditions as explained in your policy wording.
Other eligibility criteria may apply and you should refer to the policy wording for full details.
Please note: there are exclusions and limitations that may apply to your policy. The exclusions listed below are not exhaustive and you should read the policy summary and policy wording documents fully.
Please be aware that you may be unable to claim for any condition, injury, illness, disease, sickness or related condition and/or associated symptoms, whether specifically diagnosed or not which you knew about (or ought reasonably to have known about) at the start date or for which you sought or received advice, treatment or counselling from any doctor during the 12 months immediately before the start date
If you are self-employed and wish to claim unemployment benefit you will need to provide satisfactory evidence that you have ceased trading and are entirely without gainful employment, including the assisting, managing and/or the carrying on of any part of the day-to-day running of a business and are available for and actively seeking work. You must also be registered as unemployed with the Department for Work and Pensions and have signed a Jobseeker’s agreement within the United Kingdom.
If you require unemployment cover, you should read the appropriate section in the policy wording which is available throughout the application process.
There is a 120 day initial exclusion period for unemployment or carer benefit. You will not be covered for unemployment that arises from any programme of job losses, any departmental or company restructure or merger with another company announced by your employer before the start date or within 120 days after the start date of your policy. This may be waived if you are transferring cover from another provider.
The sum insured under this policy and any other similar insurance policies must not exceed 50% of your monthly earned income before tax. If you exceed this limit benefit will be reduced.