MPI versue Income Protection

Kabby

Hi there,

I wonder if anyone can help with some advice. We currently have MPI which I have just increased following an overhaul of our finances and realising our cover doesn't actually cover our mortgage payment!

However doing some research I've been wondering if taking out Income Protection would not be better for us - we can insure more income and it can cover bill/other payments etc. Question 1 is can anyone recommend income protection insurance providers?

In order to ensure we are covered during the interim qualifying period these insurances are likely to run together for a couple of months which led me to ponder Question 2 - if either my husband or myself become ill or redundant are you able to claim from 2 policies if you are paying into them or would one become regarded as income?

Look forward to your responses!
Kabby

OshayAway

Kabby wrote: »

Hi there,

I wonder if anyone can help with some advice. We currently have MPI which I have just increased following an overhaul of our finances and realising our cover doesn't actually cover our mortgage payment!

However doing some research I've been wondering if taking out Income Protection would not be better for us - we can insure more income and it can cover bill/other payments etc. Question 1 is can anyone recommend income protection insurance providers?

In order to ensure we are covered during the interim qualifying period these insurances are likely to run together for a couple of months which led me to ponder Question 2 - if either my husband or myself become ill or redundant are you able to claim from 2 policies if you are paying into them or would one become regarded as income?

Look forward to your responses!
Kabby

Hi Kabby, a little more information would be helpful about the type of cover you have and are wishing to change to. MPPI / ASU are the only policies that will cover unemployment whereas true income protection (PHI) is far more comprehensive but only pays out for health reasons.

In terms of limits to the benefit you can choose, PHI is limited to a percentage of your income but MPPI is based on your monthly mortgage repayment + a 25% or 33% for related expenses but there is normally also a overall limit of 60% / 65% / 70% depending on the insurer.

If you are changing like-for-like i.e. one ASU policy for another, some providers will allow a 'transfer' that means the initial exclusion period for unemployment claims is waived. It has to be the same type (i.e. back-to-day-one / 30 day excess etc) if the benefit is higher, some will still allow this 'transfer' option but only on the original benefit of the previous policy.

In answer to your question about claiming on 2 policies, it depends on the limits. There is legislation that comes into play to ensure you can't receive more that a certain level resulting in someone being better off financially if not working.

HTH

dunstonh

Question 1 is can anyone recommend income protection insurance providers?

Not on the board. Recommending regulated financial services products is a regulated activity. Plus, even if we could, we dont know your circumstances and requirements. There is no one best option, so without details and requirements, no-one can offer the best option for you.

Plus, as oshayaway says, you have different types of income protection. You have MPPI, PPI (which is budget income protection) and PHI (which comes in different levels of cover). PHI is regarded as proper income protection whereas the others are regarded as payment protection.

Kabby

Thank you for your responses. Just to elaborate we have MPPI which covers our mortgage paypment +25% but this would only cover up to a specific limit anyway. I have sourced what is termed an Income Protection Policy (so you are right not a PHI policy) which covers a higher monthly amount and costs less than my current provider. I just wasn't sure if I was safe taking out this policy and then canx my MPPI after my initial waiting period elapsed, whether it was worth keeping both policies or if there was a better solution altogether.

My understanding is the best option would by PHI plus unemployment insurance but nowhere offers this as a standalone product any longer.

I just would like to protect as much of my husbands monthly income (he is the major earner) if he was ill/redundant as possible with the best value and quality product.

dunstonh

MPPI is not included in any means test when it pays directly to the lender (it is included if paid to your bank account). PPI is included in the benefits means test.

My understanding is the best option would by PHI plus unemployment insurance but nowhere offers this as a standalone product any longer.

PHI plus "U" is the most comprehensive option and standalone unemployment cover is still offered. However, it appears may of the internet sites have pulled it. The internet tends to focus on cherry picking the profitable bits and not the rest.