Mortgage Protection Insurance: What to Look Out For
Mortgage Payment Protection Insurance (MPPI) is a form of insurance designed to cover your mortgage payments, in case anything happens to cause you to lose your income.
You may find that when you take out a mortgage, your lender automatically offers you MPPI. Sometimes they try to give you the impression that its obligatory. But dont let yourself be bullied into taking out their policy unless you are sure its the best one. You can often get a better deal by shopping around.
Maybe you feel you dont want to do this. Taking out a mortgage can be a lengthy, exhausting and time-consuming experience. Its incredibly tempting to grab the policy the lender offers you, rather than start another lengthy process. Especially if you dont really know what youre looking for.
However you could really save money by shopping around. Of course you want to find the lowest premium but premium levels are not the only factor. Here are some pointers to help you know what else to look out for.
Unlike most other forms of insurance, mortgage protection insurance policies usually ignore age, health, smoking/non-smoking etc. Just a few give reduced rates for younger age-groups under 30 or under 40 - so if this applies to you, its worth checking this out.
When will it pay out? Most mortgage protection insurance policies dont start paying out till a month, or sometimes two months, after the problem (accident, redundancy, or whatever) starts. Now there are a few that backdate the payments to day 1, so you may prefer to choose one of those.
What is the payout term? Most mortgage protection insurance policies limit their payout term usually to 12 months. They reckon that most people will have found another job, recovered from their illness, or obtained state benefit by then. But this doesnt always happen. Try to find one that will pay out for as long as possible at least two years.
What is the maximum payout level? Some mortgage payment protection insurance policies put a ceiling on the amount of their monthly payment during the payout period. If you have a bigger mortgage, or if interest rates have risen, this amount might not be enough to cover your repayments. Try to find out what the repayment policies are.
Sometimes it can be quite difficult to find out exactly what the payment policies are on different mortgage protection insurance policies. Its worth consulting a broker to make sure you find the best possible deal.
About Author
Sean Horton is a Director of Enhanced Wealth Limited who offer a specialist mortgage payment protection insurance policy
Source: ArticleTrader.com
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