This is also known as Accident, Sickness and Unemployment insurance (ASU). It is an insurance policy intended to cover your mortgage repayments if you were to suffer an illness or injury or redundancy which leaves you unable to work.
Policies generally last between 1 and 5 years and premiums are paid monthly. The cost of premiums usually falls between £3.00 and £5.00 per £100.00 of monthly mortgage repayments. It pays to shop around, though. Don't just assume that the policy recommended by your lender will be the best value. With MPPI you can choose to cover either part or all of your monthly repayment. Most policies will only provide cover for around 12 months, though some can provide cover for 2 years.
Eligibility varies between lenders but you generally need to be aged between 18 and 65, you should be the owner-occupier of the property and have been in continuous employment for 6 months at the time of your application. You'll be asked to choose an 'excess period'. This is the period which runs from when you become unable to work to when the policy starts paying out and is typically from 3 to 9 months.
An important point to bear in mind - don't apply for MPPI if you know that you are likely to be made redundant in the near future. Any claim that you subsequently make against your insurance will result in the policy being invalidated if the insurer discovers that you knew there was a possibility of redundancy when you applied.
