MPPI - Mortgage Protection

ringo747 · 24 Nov 2010 at 19:07

So who here pays for mortgage protection to cover sickness, redundancy or accidents?

I am currently looking at getting a mortgage sorted but not sure what I should do about the MPPI side of things.

I have read that most policies only cover you for 12 months - I have enough savings in my 'emergency fund' to cover this period so there probably isn't much point. Get 6 months full pay if sick from work and also pay towards critical illness cover.

You can never tell how safe your job is but I work in IT so I guess I could get a new job somewhere fairly quickly (even if I didn't really like it).

So who does have mortgage protection and how much do you pay/month if you can disclose that?

malachi · 25 Nov 2010 at 09:35

This is what I like to know too as I'm looking to buy my own house in a few months.

a1ex2001 · 25 Nov 2010 at 09:45

I don't have any, we are a two income household and the mortgage is such that we could make the minimum payment on either of our incomes. We wouldn't be living like kings but we could get by, while we are both employed we over pay every month.

I'm not a big fan of this sort of insurance as it is a bit like hoping the worst happens as if it doesn't you have just thrown the money away, same with protected no claims on the car! I might change my mind if we have a family so there are more people dependant on us and the roof over our heads.

Basher · 25 Nov 2010 at 09:50

I get this through the benefits package at work - if I didn't, I wouldn't bother.

ringo747 · 14 Jan 2011 at 14:39

Bit of an update on this. I have been looking more seriously at all forms of mortgage protection and at the very least I think we will take critical illness/life assurance. Getting the mortgage paid if something bad was to happen gives peace of mind at least.

I looked into redundancy protection but it's >£50/month - really not worth it. I have enough emergency fund to pay the mortgage/bills for around 10 months so self insuring would be a better option.

Income protection for Accident/Sickness is the one I need to decide on - I guess if something happened and I couldn't work again then we would be screwed. If not a critical illness then that wouldn't cover you so I think income protection is worthwhile too.

The problem is that going for both will be costing £75/month at least!

So, who else pays similar amounts for cover and who are you insured with? Legal & General seem to have an excellent CI/LA package but you do pay for it.

booyaka · 14 Jan 2011 at 16:13

Life Cover & CI is a good/must purchase for a someone/couple purchasing their first house.

The Income protection side of things is all down to your own choice. It can be costly but it can be very worth while. The Accident/Sickness cover is not normally something most people elect to take, most consider a Income Replacement/Protection Plan.

Mortgage or rent to pay, monthly outgoings (such as loans or credit cards), and family responsibilities like childcare ... income protection can help give you the peace of mind that you still have money to help pay for these things, even if you can't work through illness or accidental injury.

Again you can set it up to start after "x" weeks/months so that it becomes cheaper.

For Life cover/critical illness etc - aviva, L&G, Scot Prov etc etc are all much of a muchness when it comes to cost.

I have life cover as family cover (300k), life and CI on my mortgage (120k) and also have income protection as I have nothing via my work in terms of benefits. For the record, I am an IFA myself! So I should be good at making sure I/my family are covered. Total monthly cost is about £90 a month for all that.

ringo747 · 14 Jan 2011 at 16:50

booyaka said:
Life Cover & CI is a good/must purchase for a someone/couple purchasing their first house.

The Income protection side of things is all down to your own choice. It can be costly but it can be very worth while. The Accident/Sickness cover is not normally something most people elect to take, most consider a Income Replacement/Protection Plan.

Thanks for the detail! LC/CI I was definitely planning on taking out - it is costing around £35 for me only.

Can you explain what is the difference between accident/sickness and income protection? I thought it was the same thing? My understanding was that you can either have AS or ASU - am I wrong?

booyaka said:
Mortgage or rent to pay, monthly outgoings (such as loans or credit cards), and family responsibilities like childcare ... income protection can help give you the peace of mind that you still have money to help pay for these things, even if you can't work through illness or accidental injury.

Again you can set it up to start after "x" weeks/months so that it becomes cheaper.

For Life cover/critical illness etc - aviva, L&G, Scot Prov etc etc are all much of a muchness when it comes to cost.

L&G was the CI I had looked at - they cover more illnesses than anyone else it seems.

booyaka said:
I have life cover as family cover (300k), life and CI on my mortgage (120k) and also have income protection as I have nothing via my work in terms of benefits. For the record, I am an IFA myself! So I should be good at making sure I/my family are covered. Total monthly cost is about £90 a month for all that.

Another dumb question from this... Is CI/LC only for the duration of the mortgage or can you get life cover beyond 65?

DBT85 · 14 Jan 2011 at 17:33

We don't have any mortgage insurance at all. We have enough sitting in Premium bonds to pay the mortgage for 3 months in the event that we both lost our jobs at the same time. The kind of work we do is always in demand so it seemed pointless really. Thats not taking into consideration the savings we have easy access to.

We do have Life and Critical Illness though. Will only pay for the house at the moment. When sprogs start rocking up we'll probably take out just a life policy for 150k or something just in case.

CI cover can get expensive though. Ours is £75 a month becuause the wife is a little overweight for her height and also has Non Alcoholic Hepatitis (her liver runs at 50% and wasn't caused by boozing). If she didn't have that our would be £55 a month.

ringo747 · 14 Jan 2011 at 18:31

There are just so many options that it gets confusing!

Everybody recommends different things especially around joint/single policies and level/decreasing terms. As long as we have CI/LC at a minimum it should be fine.

The Halk · 14 Jan 2011 at 18:39

Ok.

You do NOT want "Payment Protection" in any shape way or form. Under any circumstances. No.

You do want Life Insurance & Critical Illness cover - you want a joint policy. However shop online for it, and compare decreasing (reducing) to level term. And also compare sole policies - one policy each. You only need a joint decreasing policy, anything else is not required, and you shouild only go for if it's marginally more expensive only. Don't pay more than a quarter over the top of the cheapest.
Cheapest - Joint, decreasing.
Best - Sole, level

You also want Income Protection. This does not cover you for unemployment. But it does cover you until retirement for a claim. It will pay for example 50% (don't go above that %age) of your salary until you retire. You want 1 policy each.

booyaka · 14 Jan 2011 at 19:21

ringo747 said:
Thanks for the detail! LC/CI I was definitely planning on taking out - it is costing around £35 for me only.

Can you explain what is the difference between accident/sickness and income protection? I thought it was the same thing? My understanding was that you can either have AS or ASU - am I wrong?

ASU - accident sickness & unemployment cover normally covers your main monthly outgoings (mortgage, council tax etc etc) for a period of normally 12 or 24 months maximum, Income protection does NOT cover you for unemployment, but will pay you a liveable wage in the event of you being unable to work due to accident or sickness. Premiums are calculated on your occupation and benefit required (you can normally specify up to 65% of your gross salary). When calculating the benefit, you need to consider your outgoings.

You also need to decide how long you could wait before the policy benefit is paid out i.e. 4/8/13 weeks, and also to what age the benefit would be paid if you were permanently incapacitated. it can cover you normally up to 60 or 65 and will pay for as long as you qualify under the terms of the plan

L&G was the CI I had looked at - they cover more illnesses than anyone else it seems.
Most major companies are all the same list of critical illnesses which are specified by ABI (assocoation of british insurers)

Another dumb question from this... Is CI/LC only for the duration of the mortgage or can you get life cover beyond 65?

can be either or, you can setup it up for the exact term and amount of your mortgage and then you could take out a seperate life cover/ci cover plan for family protection/peace of mind etc - it's up to you.