MPPI Advice

mrochester

Hi all, I really have no clue as to what types of insurance I should have to cover my mortgage payments and other monthly outgoings, so I hope someone can offer me advice. My mortgage is £100,000.

I currently have an MPPI policy with GI Secure which covers my £215 monthly mortgage payment as well as my £100 monthly council tax payment. Under cover type this is listed as 'Disability' so I assume that means the policy covers me and my partner for any new disability that would prevent either of us from working (my partner already has a known disability, so this would clearly not be covered). The length of benefit is 12 months, as I understand this means the max they will pay is 12 months benefit, and the deferred period is 'back to day one' which I understand to mean that even though we may have to wait a number of days before we receive first payment in case of a claim, it would be backdated to the first day of disability. I pay £7.28pm for the above policy.

I am employed full-time on a permament basis. However, my partner is employed full-time on a fixed term basis. I understand this means that unemployment cover would really only be beneficial to me. However, I work for the NHS and the only real prospect of me becoming unemployed is through voluntary or compulsory redundency, both of which currently pay a decent redudancy payment which I feel would be adequate enough to 'get by'. As the MPPI would pay only a max of 12 months at a time, it seems that it wouldn't be worth my while paying an additional premium for unemployment cover.

In conjuction with that we have a BUPA Health Assurance Limited policy for 'Critical Illness with Life Cover'. Now, I understand that this policy will pay out if either of us fall critically ill, or die, and that it isn't linked in any way to whether we are employed or not (is this correct?) The policy is fairly expensive (£40pm) because it has a premium loading due to my partner's mental health and asthma issues.

What I'm looking to understand is whether we have the appropriate level of protection and/or whether I'm paying over the odds for something. I've a good opportunity this week to review my finances so it'd be really helpful to get some advice on here.

Many thanks for any thoughts regarding the above.

Michael.

dunstonh

, so I hope someone can offer me advice.

A local IFA would give you advice. We can only offer discussion.

I currently have an MPPI policy with GI Secure which covers my £215 monthly mortgage payment as well as my £100 monthly council tax payment.

Normally MPPI plans cover the mortgage and other directly related insurances. Often the limit is 125% of the mortgage payment. I would check to see if the plan would actually cover council tax. A PPI plan could but an MPPI may not.

As the MPPI would pay only a max of 12 months at a time, it seems that it wouldn't be worth my while paying an additional premium for unemployment cover.

Yes. A PHI policy may be better for you based on what you have said.

In conjuction with that we have a BUPA Health Assurance Limited policy for 'Critical Illness with Life Cover'. Now, I understand that this policy will pay out if either of us fall critically ill, or die, and that it isn't linked in any way to whether we are employed or not (is this correct?) The policy is fairly expensive (£40pm) because it has a premium loading due to my partner's mental health and asthma issues.

£40 is not expensive for life & CI. It may be loaded because of the health issues but if you were to pull a figure out of the hat for £100k of life and CI, then £40 would be a figure you would think of.

magpiecottage

dunstonh wrote: »

Yes. A PHI policy may be better for you based on what you have said.

That might be valuable but bear in mind that it will pay a maximum percentage of earnings prior to falling ill, less any reduced earnings and other insurance amounts. With that in mind, remember:

1. If your OH is not working then any percentage of nothing is nothing - so if they fell ill between jobs it would not pay
2. The NHS also has various ill health and early retirement benefits. These are partly based on length of service.

Critical illness is fine but unless you are "fortunate" enough to get exactly the right illness (and not something similar or less severe than specified) it won't pay either.

DunstonH and I share the view that PHI is better than PPI and I suspect he also thinks PHI is better than CI but all insurance has its limitations so you need to look at the cost, the potential benefits and whether what it insures against is something you are capable, and comfortable, to do without - that may depend on price but the price reflects the insurers assessment of how likely you are to claim.

dimbo61

You have a £100K mortgage and pay £215 a month INTEREST ONLY ? or one very low tracker

mrochester

dimbo61 wrote: »

You have a £100K mortgage and pay £215 a month INTEREST ONLY ? or one very low tracker

Thanks for all the advice. Yes it's interest only at the moment (not switching it to repayment until the OH has a permanent job!).