Mortgage Payment Protection Insurance (MPPI)
MPPI is a general insurance policy usually written as annually renewable that will pay a monthly benefit equal to 100% or 125% of the mortgage costs if the insured is unable to work because of:
- sickness;
- accident or disability; or
- unemployment.
MPPI is available as a 'half-strength' policy, providing either unemployment or sickness and accident cover or as a 'full-strength' policy.
Product features vary between providers but typical terms and conditions would include:
- The proposer must be between 18 and 64.
- Pre-existing medical conditions are excluded.
- The proposer must currently be working at least 16 hours per week for at least the last six months.
- The proposer must not be aware of any forthcoming redundancies or be currently off work for any reason.
- The cover can be cancelled by the insurer subject to a specified minimum period of notice.
A typical MPPI policy will cover mortgage costs for a maximum of two years. Some lower cost policies provide shorter periods of cover.
Accident, Sickness and Unemployment (ASU)
ASU cover is virtually identical to MPPI, except that it is not designed exclusively to cover mortgage costs and is used for the more general purpose of replacing lost income as a result of any of these three events.
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