MRP- still paying for original amount of cover

chickalittle

Hi - hopefully someone can help!
I took out MRP with my original mortgage. At the time the rates were higher and so I took out £900 of MRP to cover the mortgage & related insurances. I have never bothered to change the cover amount but now that rates have dropped so much my mortgage payments are significantly lower.

If I was made redundant what would the insurance company pay out - would they still pay the the original amount?

I have always been wary of changing the cover incase it provided them with the opportunity to increase their premiums per £100 cover required but possibly if they restrict the amount they pay out then it means I have in effect overpaid for what I need. Advice anyone?

robnye

stick with it..... they would pay out the £900 per month should you claim.

i have cover for £750 and looked into changing it, but due to the length of time it has been in play, they would end up putting my premium up

dwsjarcmcd

This type of insurance is not an 'indemnity' insurance. If it was it would only put you in the position you were in immediately before the loss i.e. cover your reduced outgoings.

As it is not that type of policy, in essence your cover equates to what you can pay in premiums, so your benefits would be unaffected by reduced outgoings.

payless

policy docs will give you guidance- many will restrict payment if mortgage repayment is now less .

Hotcross

robnye wrote: »

stick with it..... they would pay out the £900 per month should you claim.

i have cover for £750 and looked into changing it, but due to the length of time it has been in play, they would end up putting my premium up

Be careful that you are not making the false assumption (that your insurer is hoping you will make), and find that you are overpaying them for cover you will never actually receive! If you read your policy document carefully, or have to make a claim, you may be in for a nasty surprise.

chickalittle

Thanks for the replies - I will have to dig out the original paperwork which will be a nightmare to find in this place! I have had the policy 10 years so my premiums are really pretty low for the level of cover I have - I could find myself in a situ where I lower my benefit level but end up paying more in premiums maybe?
What do other folk do out of curiousity with regard maintaining this type of cover?

robnye

Hotcross wrote: »

Be careful that you are not making the false assumption (that your insurer is hoping you will make), and find that you are overpaying them for cover you will never actually receive! If you read your policy document carefully, or have to make a claim, you may be in for a nasty surprise.

the cover i have specifically states it is for a monthly payment.... not specifically for mortgage payments. therefore they wouldnt reduce it due to the mortgage going down.....nor would they increase it if the mortgage went up!