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Guide to Mortgage Payment Protection Insurance

Published by FTAdviser | Aug 30, 2012

The furore around payment protection insurance is likely to deter many people from buying a similar-sounding product, mortgage payment protection insurance, although it is quite different and can provide a valuable safety net at a lower price than income protection.

New laws introduced in April as a result of recent competition commission rulings mean that mortgage advisers can no longer sell accident, sickness and unemployment insurance products, including PPI and MPPI, at the point of sale of a mortgage.

Now, when a mortgage is being sold advisers can provide a MPPI quote to customers at any time but it cannot be sold until seven days after the later of two events – either the date the lender formally makes the mortgage offer to the customer or the date of the adviser provides the customer with a quote.

These new rules have led to some providers, including Lloyds, Santander and Hitachi, pulling out of the MPPI market and means IFAs have a more crucial role in filling the gaps in client knowledge and product sales.

Answers provided by David Hollingworth, associate director at London & Country Mortgages, Dennis Haggerty, marketing manager at iprotectinsurance.co.uk, and Martin Sincup, product manager at LV=.

  1. Q: What is mortgage payment protection insurance?

    MPPI provides financial protection for home loans for those who can’t afford full income protection.

  2. Q: What are the alternatives to MPPI?

    Short-term income protection is an economical relative with no connection to monthly mortgage repayments.

  3. Q: What are the problems with MPPI?

    MPPI can be a one-size-fits-all product and is not a long-term solution, but there are alternatives available.

  4. Q: What MPPI after-sales support must I provide?

    New laws mean advisers selling MPPI have a number of simple obligations.

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Mortgage payment protection insurance

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Q2.  Can you immediately claim on mortgage protection insurance?

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Q3.  What is the closest cousin to mortgage payment protection insurance?

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Q4.  What duration does a MPPI policy cover a client for?

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Q5.  What is the usual notice period for a change in the policy?

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Q6.  What changes were recently made following an investigation by the Competition Commission?

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