PPI Monthly Benefit restricted to "Normal Monthly Mortgage Payment"

sheikhr

Hi

I took out Unemployment Mortgage Payment Protection Insurance at the beginning of 2008. At that time lets assume (and im using arbitrary numbers) my mortgage payments were £500 so this is the amount I covered.

Since then, interest rates have come down and as I am on a variable rate mortgage my monthly repayments have come down to £300.

I have however continued to pay the same premium and hence would like to be able to claim the £500 I covered at the beginning of the policy however there is a Maximum claim clause which effectively restricts your monthly claim to your normal monthly mortgage payment but they have failed to define normal monthly mortgage payment.

I need your help in figuring out whether this clause can be circumvented by either

a) increasing my mortgage payment to the orginal £500 level (I have the option in my mortgage to make regular overpayments without penalty) or

b) reduce the term of the mortgage such that the repayment equates to £500. I am not certain if this is possible with the type or mortgage I have but for arguments sake lets assume it is possible.

With respect to the T&C's...here are the most relevant parts....

In the event that I am made redundant, I should be able to claim under this policy, and receive my "Monthly Benefit".

Monthly Benefit is defined as the amounts shown in the policy schedule for MPPI payable to YOU on a monthly basis in arrears, for a max of 12m..."

The max you can claim for is your normal monthly mortgage payment (including related life and household premium), plus optional cover up to a further 25%. Please note the total amount insured cannot be more that £2000 or 65% of "Your Gross Monthly Income".

Within the t&c's the normal monthly mortgage payment has not been defined. Terms in Speech marks have been defined eg Monthly Benefit, You, Your gross monthly Income however normal monthly mortgage payment is not defined and nor does it state minimum monthly mortgage payment.

On this basis, I would assume that both options a and b would achieve my goal of being able to claim the full £500 and not just the £300 so long as I do pay the £500 before starting to claim and I continue to pay £500 throughout the period of claiming. I do not think option a or b would invalidate my policy either.

When I called up british insurance, the person suggested that I would not be able to include overpayments but would be able to restructure my mortgage. When I asked for the terms that stipulate why I would not be able to include overpayments he was unable to clarify and suggested that I write in and they will get confimration from the underwriter (Assurant Solutions).

I am a little hesitant to do this as the t&c's do state that they have the right to change the T&C's (if they meet certain conditions), and they have change some of the T&C's late in 08 so I would rather not alert them to my train of thought.

Any suggestions? or firm interpretations of the terms

Many thanks

PS. clearly a tip for those that took out PPI before interest rates were cut and now have a lower monthly mortgae repayment. If you wish to reduce the premium, you should be able to do so by informing the insurer that you would like to reduce the "monthly benefit" but I would suggest getting it in writing that this does not start a new policy and hence does not include a new exclusion period. My insurer was fine with decreasing the amount of cover however if you are to increase the benefit again ie if rates go up again (which doesnt look to be happening any time soon), you are likely to be subject to a new exclusion period.

di3004

sheikhr wrote: »

Hi

I took out Unemployment Mortgage Payment Protection Insurance at the beginning of 2008. At that time lets assume (and im using arbitrary numbers) my mortgage payments were £500 so this is the amount I covered.

Since then, interest rates have come down and as I am on a variable rate mortgage my monthly repayments have come down to £300.

I have however continued to pay the same premium and hence would like to be able to claim the £500 I covered at the beginning of the policy however there is a Maximum claim clause which effectively restricts your monthly claim to your normal monthly mortgage payment but they have failed to define normal monthly mortgage payment.

I need your help in figuring out whether this clause can be circumvented by either

a) increasing my mortgage payment to the orginal £500 level (I have the option in my mortgage to make regular overpayments without penalty) or

b) reduce the term of the mortgage such that the repayment equates to £500. I am not certain if this is possible with the type or mortgage I have but for arguments sake lets assume it is possible.

With respect to the T&C's...here are the most relevant parts....

In the event that I am made redundant, I should be able to claim under this policy, and receive my "Monthly Benefit".

Monthly Benefit is defined as the amounts shown in the policy schedule for MPPI payable to YOU on a monthly basis in arrears, for a max of 12m..."

The max you can claim for is your normal monthly mortgage payment (including related life and household premium), plus optional cover up to a further 25%. Please note the total amount insured cannot be more that £2000 or 65% of "Your Gross Monthly Income".

Within the t&c's the normal monthly mortgage payment has not been defined. Terms in Speech marks have been defined eg Monthly Benefit, You, Your gross monthly Income however normal monthly mortgage payment is not defined and nor does it state minimum monthly mortgage payment.

On this basis, I would assume that both options a and b would achieve my goal of being able to claim the full £500 and not just the £300 so long as I do pay the £500 before starting to claim and I continue to pay £500 throughout the period of claiming. I do not think option a or b would invalidate my policy either.

When I called up british insurance, the person suggested that I would not be able to include overpayments but would be able to restructure my mortgage. When I asked for the terms that stipulate why I would not be able to include overpayments he was unable to clarify and suggested that I write in and they will get confimration from the underwriter (Assurant Solutions).

I am a little hesitant to do this as the t&c's do state that they have the right to change the T&C's (if they meet certain conditions), and they have change some of the T&C's late in 08 so I would rather not alert them to my train of thought.

Any suggestions? or firm interpretations of the terms

Many thanks

PS. clearly a tip for those that took out PPI before interest rates were cut and now have a lower monthly mortgae repayment. If you wish to reduce the premium, you should be able to do so by informing the insurer that you would like to reduce the "monthly benefit" but I would suggest getting it in writing that this does not start a new policy and hence does not include a new exclusion period. My insurer was fine with decreasing the amount of cover however if you are to increase the benefit again ie if rates go up again (which doesnt look to be happening any time soon), you are likely to be subject to a new exclusion period.

Hi there

You have made this very clear indeed, good luck with this and at the same time I am bumping this thread up for you so hopefully someone else may post up as well with any of their own opinions.;)

sheikhr

PS.

a) My insurer has now confirmed verbally that they are allowing persons on a variable rate mortgae to claim the original amount. I have asked for this in writing.

b) They also confirmed verbally that I would have been able to restructure the terms of my mortgage / remortgage in order to get the monthly payment = what it was originally and hence claim the original insured amount.

option A makes the most sense for me so I will chase for the confirmation in writing

Thanks