This is also known as Accident, Sickness and Unemployment insurance (ASU). It is an insurance policy intended to cover your mortgage repayments should you suffer from illness or injury or in the event that you are made redundant which leaves you unable you can't work.
Typically, policies last for between 1 and 5 years, after which you can reassess your need to re-insure. Premiums, the cost of which varies from insurer to insurer, are paid monthly. Usually the cost of premiums falls between £3.00 and £5.00 per £100.00 of monthly mortgage repayments. It pays to shop around, however, because the insurance deals linked to mortgages by some traditional lenders aren't necessarily good value for money.
MPPI allows you to cover either part or all of your monthly repayment and you'll find that most policies of this type will only provide cover for around 12 months. To be eligible for MPPI you generally need to be aged between 18 and 65 (although some lenders have a cut-off age of 63). You should be the owner-occupier of the property and have been in continuous employment (including self employment) for 6 months when you apply. You'll also need to choose an 'excess period'. This is the period of time which runs from when you become unable to work to when the policy begins to pay out and is usually from 3 to 9 months.
Two important points to remember - firstly, if you are aware of impending redundancy when you apply for MPPI and later make a claim against your insurance policy, your insurer will not honour the policy if they find out that you knew that your situation would change at the time you took out you policy.
Secondly, although it's easy to think that you're immune from problems (otherwise known as the 'it can't happen to me' syndrome), remortgaging your home is a big responsibility. In the worst case, you could lose your home if you fall behind in your repayments, so some form of protection for your biggest financial asset may pay off in the long run.
