With recent research* revealing that homeowners are paying a staggering £7 billion more than they need to on mortgage payment protection insurance (MPPI), now would be a good time to check whether you are one of 2.2million people in UK who are paying too much for theirs.So what is mortgage payment protection insurance? MPPI is an invaluable insurance policy, protecting your mortgage payments in event of you being unable to work due to redundancy, having an accident or falling ill. This means you have peace of mind that you will keep a roof over your head while you find another job or convalesce.
Most MPPI policies are sold by mortgage lenders at time they provide a mortgage. However, very few lenders actually tell people that they can shop around for a cheaper rate – which, according to research*, could save an average of at least 32% on their monthly premiums, without compromising on level of cover provided.
Astonishingly, premiums do vary quite widely among mortgage lenders, with most expensive being a huge £7.70 for every £100 worth of unemployment and disability cover required compared with £3.95 for same cover being among cheapest!
For example, by taking out cheaper policy – but one with equal or even better product features - it means that you will pay only £19.75 to receive a monthly benefit of £500 against risks of both unemployment and disability. This compares with an average £29.00 per month from traditional mortgage lenders – a saving of 32%.
If you have a mortgage, you don’t have to have your lender’s mortgage protection cover. Even if you already have MPPI, it is simple to switch to another provider and make significant savings.
So what do you need to look out for when choosing an MPPI policy? First of all, you can choose amount of cover you need, as well as type and level of cover
Apart from premium, type of cover offered can vary from lender to lender. A benefit that not all providers offer but is extremely valuable is ‘back-to-day-one’ cover. This means that if you have this product feature, you will be paid out back to day claim became valid after just 30 days. While this feature is normally only found in policies that are expensive, there are providers who offer this benefit at a nominal cost.