If you decide to take out mortgage protection insurance (MPPI) along with your mortgage, you will find your monthly payments are higher. This may give you a sense of security, as you believe that your repayments are safe whatever happens. However, some people get a nasty shock when they find that, despite making the higher monthly payments, they are not covered when problems do arise.
So what might be excluded from mortgage protection insurance?
- Pre-existing medical conditions – any condition you were already suffering from when you took out the policy, whether you had received treatment for it, or just whether it could be proved that you knew about it.
- Unemployment, if you knew you were likely to lose your job, or be made redundant, when you took out the policy. It is also excluded if your work was temporary or seasonal. You may also be excluded if you are not registered as unemployed or not seeking alternative employment – which seems rather hard if you have been paying your premiums!
- Loss of your job if you left work voluntarily or were required to leave for disciplinary reasons, or because of industrial action.
- If your “sickness absence” from work is due to conditions which might be regarded as “psychological” or self-induced. These could include stress, backache or depression. These conditions could be excluded even if you had certification from your doctor that you were unfit to work.
- Any disability for which you had received treatment or advice during the preceding year, or for which medical evidence has not been provided by a registered medical practitioner.
- Pregnancy. This should not be a major problem if you can claim full maternity benefits.
Not all of these are excluded by all mortgage protection insurance policies, but all are excluded by some! It can be very hard to discover in advance exactly what is excluded. To avoid getting a nasty shock when it’s too late, use a broker who is experienced with these types of policy to help you find the best policy for your own needs.
