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Mortgage
Protection - ( for new and existing mortgage borrowers
)
Accident, Sickness and
Unemployment (ASU) cover, otherwise known as Mortgage Payment
Protection Insurance (MPPI) or Mortgage Protection. It is designed
to provide a monthly income to enable the mortgage payments to be met
should you be unfortunate enough to be made redundant, or be unable to
work due to an accident or sickness. It is not compulsory, unless the
particular lender's scheme has it as a condition; however, it makes
good sense.
Don't
let your biggest commitment go unprotected.You can arrange this
valuable cover online, now, by clicking here
The article
below was taken from a trade press publication in November 2001
The Council of
Mortgage Lenders (CML) is recommending that borrowers recognize that
the future is uncertain and act accordingly. With the economy and the
housing market set to slow down next year, now is a good time for
borrowers to review whether they have a sufficient financial cushion
against a drop in income, it says. New figures from the CML and the
Association of British Insurers reveal that 21 per cent of all
mortgage holders now have mortgage payment protection insurance. 32
per cent of people who took out mortgages in the first half of 2001
took out MPPI at the same time. Well over two million MPPI policies
are now in force.
One of the most noteworthy features of the latest CML/ABI figures is
the very high claims success rate for MPPI policies. 88 per cent of
all MPPI claims were accepted, compared with 82 per cent a year ago.
For accident and sickness claims, over 90 per cent were accepted.
Although most borrowers buy MPPI policies via their lender, an
increasing number of policies are now being arranged via
intermediaries (24 per cent of policies sold in the first half of
2001). This shows that the work that the CML and ABI have been doing
to raise awareness among intermediaries of this type of insurance is
bearing fruit.
The number of people with mortgage insurance has increased since the
CML and ABI launched new standards for MPPI in July 1999, but the
increase appears to be levelling off. The CML believes this could be
due to various factors - in particular, the recent strong performance
of the housing market and the low level of interest rates, which have
helped to underpin buoyant consumer confidence. In this environment,
many people may have felt confident enough not to need MPPI. But with
the economy expected to slow down and the housing market beginning to
cool, recent borrowers are now encouraged to look again at how they
can protect their mortgage repayments. It is also appropriate for the
industry to consider what else, as well as MPPI, can help to provide a
safety-net, especially in the light of changing market conditions
since the CML/ABI initiative was originally launched.
Michael Coogan, CML Director General, said: "With an economic
slowdown under way, borrowers need to think seriously about
recession-proofing their mortgage. Private insurance has a part to
play in this. At the same time, sustainable home ownership is about
more than just insurance - the economic environment, lending and
arrears policies, and consumer behaviour all have a part to play. We
also look to Government to introduce improvements to the benefits
available to borrowers in most financial difficulty."
Mary Francis, ABI Director General, agreed "The current
uncertain economic climate makes it all the more important that
borrowers have financial protection against any unexpected loss of
income," she said. "All borrowers should consider carefully
the value of mortgage payment protection insurance in helping to
safeguard mortgage payments." |
