Mortgage Payment Protection Insurance - Do I need it?

Sarfaraz

Hi all,

Just arranging a remortgage at the moment but I'm getting a hard sell to take out MPPI, specifically a decreasing term assurance critical illness cover over an 18 year term. The remaining amount on my mortgage is approx £150k.

I have no dependants, am single, I have enough in savings to tide me over for mortgage payments for 2 years and my work offers 4 x my salary if I pop my clogs whilst in employment.

Do I need the cover the broker is suggesting?

Thanks,

Saf

NineDeuce

Only if you like giving your money to insurance companies for a laugh....

YHM

Saf

What you have been recommended is not MPPI.

It is a policy that would pay off your full mortgage if you were to die or be diagnosed with a critical illness. Whilst the death part isn't a concern to you as you have no dependants, I would always recommend critical illness to my clients as a way to protect them should they be diagnosed with something that could have a significant impact on their lives / ability to work.

If you are in a fortunate position to have sufficient assets to call upon, then you may feel it isn't for you, however, it would be irresponsible of your broker / adviser to not at least inform you of your options

kingstreet

If you are single no dependents, your advisor should be talking about income protection/permanent health insurance.

Being able to pay your mortgage and maintain your standard of living in the event of illness or disability should be far more important than death or critical illness cover.

Your are far more likely to suffer a long-term illness causing you to lose your income, than you are a claimable critical illness or die. If you really do have two years net income, you can set up the cover so it starts to pay out only when you need it and this will reduce the cost of the cover dramatically.

dunstonh

Permanent health insurance (PHI) is the obvious choice here. However, not all mortgage brokers have it available (whole of market advisers for insurance would but tied agents - such as those in most estate agents often dont)

as mentioned, what you describe is not MPPI. It is critical illness cover. A nice to have but below the pecking order for PHI.