No-one wants to think about it but it's possible there will be an unforeseen event which could lead you to struggle in repaying loans or even your mortgage.
Payment Protection Insurance or PPI guarantees that these repayments continue to be paid so both you and your lender are protected until things get better.
But there are lots of products out there and a load of terminology to wade through. What is payment protection insurance (PPI) and what about mortgage payment protection insurance (MPPI)? Do I need both are do they cover the same things? This article will help you make those choices.
What is PPI?
PPI stands for Payment Protection Insurance. It provides financial protection for monthly debt repayments such as credit cards and loans in the event you are unable to work. It covers issues such as illnesses and unemployment, which may prevent you from repaying your debt.
PPI is usually sold alongside products such as loans or credit cards. It usually covers payments for a finite period. Often around 12 months which may be sold as short-term insurance. It can be paid on a monthly basis or paid in full, which is known as a ‘Single Premium Policy’. Payment Protection Insurance is an umbrella term for many types of repayment insurance and has become notorious lately due to the mis-selling of these insurances in the past.
What is Mortgage Payment Protection Insurance?
Mortgage Payment Protection Insurance or MPPI ensures your mortgage is paid in the event of illness or unemployment. It comes under the umbrella of PPI but it is classed as a separate product as it covers specifically your mortgage only.
Are they the same?
Both insurances are a form of payment protection but PPI and MPPI are not the same.
One of the main differences between Mortgage Payment Protection Insurance and PPI is that PPI is paid directly to whomever you have borrowed from, whereas MPPI is paid directly to you, the policyholder.
MPPI and PPI are similar in that they only cover one form of income. However, with PPI this can be credit card or loan repayment whereas MPPI is specific to mortgage repayment.
MPPI: Is it Safe?
MPPI is completely safe and something highly recommended to protect you and your family in cases when you are unable to keep up with payments. Both PPI and MPPI have had restrictions placed on them to ensure that the mis-selling scandal is not repeated. This monitoring allows you to be confident in purchasing payment protection insurance in the future.
Our friendly and knowledgeable team at Steel and Co. are more than happy to discuss your insurance requirements and are on hand to give advice. Call 01502 446000 or email