Mortgage Protection Insurance comparison

babysaver

I've had MPI with Abbey National for the last few years - paying £16.85 per month for £517 worth of cover (well half of that I suppose since it's a joint policy with my boyfriend).
As a diligent moneysaver I thought I'd shop around and, surprise, surprise, I can get much lower premiums elsewhere!
Help-u-pay and Paymentshield have similar premiums (although I'm having problems getting help-u-pay to confirm if this can be a joint policy).
The policy wording on paymentshield looks very similar to the current one I have with Abbey but is over £5 per month cheaper - which makes me worry that the policy might not actually be as good.
Does anyone know if there is a huge difference in the various MPI providers or if they're all kind of similar.
I know that individual circumstances all vary and have been thinking about this over the last few months but haven't got round to doing anything about it in case I end up with a cheaper (but rubbish) policy.
I know I've gone on a bit here so thanks in advance

dunstonh

Generally what they offer is very similar.   The most common differences are initial deferment period which can very from 30 to 60 days and the length of time they pay out which can be upto 24 months at best but usually 12 months.

babysaver

I should have said that I get full pay for the first 6 months if I'm off work sick so the deferment bit probably wouldn't be too much of an issue.
I can't find any policies that have any longer than a 60-day period before they start to pay out.

payless

Are you looking at just "sickness" rather than "unemployment or sickness" ?

babysaver

Just sickness for comparison purposes - I'm thinking of adding unemployment. I've been quoted £19 approx including unemployment and £11 approx for sickness only via paymentshield.
Thanks

dunstonh

In which case you may be better off looking at PHI cover rather than mortgage protection.

The PHI cover can start on 6 months and go the full term of the mortgage or until your selected retirement age. These are age, occupation and health underwritten and can often be cheaper than ASU plans that you are currently looking at.

babysaver

What's PHI cover :-[

dunstonh

permanent health insurance. That is the generic name but more commonly known by some as income protection.

These are the original income protection plans and far more suitable and beneficial for covering your income for accident and sickness than an ASU (accident sickness and unemployment) offered with the mortgage.

Because many PHI plans come under regulated rules, you dont often see them being offered by a mortgage advisor. They dont have unemployment cover but because they are underwritten knowing your circumstances, its hard for the insurance company to get out of not paying a claim. Also, once accepted, the insurance company cannot refuse or cancel cover in the future and premiums are set at the outset for the whole term. Regardless of how many times you claim. Like most insurance policies, there are budget versions of these and full versions which give greater cover.

babysaver

Thanks DD - I'll shop around for premiums for this. I've never heard of PHI before. I didn't think the MPI I was sold when I took out my mortgage was really necessary because I'm in a very stable job that pays me for 6 months if I'm off sick but the advisor "strongly reccommended" it and implied that our mortgage application would be looked at more favourably if we took it out >:(

payless

Yes PHI might well be better - Obviously I was leading into this - with this question

payless Posted on: Oct 9th, 2004, 11:39am

Are you looking at just "sickness" rather than "unemployment or sickness" ?

Because many PHI plans come under regulated rules, you dont often see them being offered by a mortgage advisor.  

Which "regulated" policies do you think are better than the ones currently sold as "pure protection"?

Some "mortgage/ insurance advisers do advise on PHI ! ( Have previously argued the merits of PHI in depth on the insurance forum)

Not sure its the regulation that stops mortgage advisers- and anyway we are all going to be FSA regulated soon, its more
1. More complex and some "non regulated advisers" appear to decide to go down the easy route

2.  Some "advisers" using limited panels of providers
( the ones with best life insurance - or even in some cases the ones with best commission  :-/  ) and thus not having access to the providers with the better PHI policies

dunstonh

Yes PHI might well be better - Obviously I was leading into this - with this question

I spotted that and knew exactly where you were going.

Which "regulated" policies do you think are better than the ones currently sold as "pure protection"?

Didnt say there were any better or worse ones under regulated or non-regulated.

Some "mortgage/ insurance advisers do advise on PHI ! ( Have previously argued the merits of PHI in depth on the insurance forum)

Not sure its the regulation that stops mortgage advisers- and anyway we are all going to be FSA regulated soon, its more
1. More complex and some "non regulated advisers" appear to decide to go down the easy route

2. Some "advisers" using limited panels of providers
( the ones with best life insurance - or even in some cases the ones with best commission ) and thus not having access to the providers with the better PHI policies

It comes back down to generalisations again which i know we both hate. Personally, i have never seen a PHI sold by a mortgage advisor. I have only seen them sold by tied advisors or IFAs. This doesnt mean that some dont sell PHI. However, i reckon that your option 2 is probably the most likely reason why you dont see many PHIs sold by mortgage advisors. Indeed, i would think that many dont even have a PHI product in their panel. Particulary in the case of banks/building societies