Will they pay my full cover even though my mortgage payments have reduced?

99Dave

I have a mortgage payment protection policy for 4 yrs, when i took it out my mortgage was £1400pm its now £400 due to interest rate reductions. In the event of a claim, which may happen this year, will they pay me the full amount or reduced amount?

I have an interest only mortgage, so if they will only cover the reduced amount could i convert it to a Repayment mortgage to increase the payments and therefore get the full cover?

Has anyone experienced this or know the answer?
Thanks
Dave

murphy306

No going my by own experience they will contact the mortgage provider and they will advise them your payments have reduced. Then they will ONLY pay that amount for your mortgage. I was raging when I found out as I thought they would at least pay the amount I was insured for! Also by the time they do actually pay out from the policy you will probably be in arrears unless you have savings to cover the payments in the meantime. It took about 6 months before they started to pay mine, we were lucky we had savings but it was a real fight to get them to pay and by which time I was due to start a new job so they only paid one month.

Apparently you need Income Protection Cover or something similar if you want a standard amount should you become unemployed or can not work due to sickness or accident.

Hope this helps.

99Dave

Does anyone know whether the insurance companies have any rules on how long your mortgage payments have to be at a certain level? ie if i convert to repayment mortgage and increase my payments the month before i claim will they pay me cover for those new instalments?
Thanks

murphy306

Dave that is what we had done and had been paying for a few years the extra on top of repayment but they would not budge and pay any extra. I am unsure as to if they all do that but I know ours didn't agree to pay any extra even though we had proof of paying more and were insured for the larger amount

tyllwyd

When we needed to renew our MPP with Nationwide this October I asked a similar question and we were told that for the future when the policy was renewed, instead of paying out one amount for mortgage and another for living expenses, they would be paying the total and it was for us to split it. I may have misunderstood, but if you are with NW I would phone and check.