Mortgage Payment Protection Insurance (MPPI)
This is a type of insurance designed to cover your monthly mortgage payment for a specified time, typically one year. For the policy to pay out, you must meet the terms of the cover. This usually means being made redundant, being incapacitated and unable to work because of an accident, or becoming ill.
Since the mortgage payment is usually the biggest financial outgoing most people have, MPPI provides peace of mind that it would be covered for several months if something unforeseen happened. The one-year term is usually the longest you can expect it to pay out for.
This is not a required form of insurance. If you already have savings put by to cover being out of work for any reason for a year, you may not wish to pay the monthly premiums for additional cover. That said, it is worth looking at how much your monthly mortgage payments are. You could cover part of those payments with your savings and get a suitable MPPI policy to cover the remainder. It’s also worth exploring how much redundancy money you would be entitled to if you lost your job. This might be enough to cover your payments for several months. This is particularly important since MPPI policies don’t usually kick in for a few months anyway.
It is very important to read the terms and conditions attached to a policy of this kind. Some cover illness only whereas others cover unemployment. More expensive policies cover these and provide accidental cover as well. Make sure you know what you are buying and what the monthly premium would be. Furthermore, some policies only cover specific medical conditions and exclude others. All the details should be listed in the small print.