New Drewberry MPPI Research – Less Than Half of MPPI Policy Holders Protect More Than Their Basic Mortgage Payments
New research indicates that less than half of individuals looking to take out mortgage payment protection insure more than their basic monthly loan payment, leaving them to cover the cost of council tax and other monthly expenses out of their own pocket.
MPPI provides a monthly benefit to maintain mortgage loan repayments should the policyholder have to cease working due to accident, sickness or unemployment. With most MPPI plans it is possible to insure up to 125 per cent of monthly repayments to provide additional cover for non-mortgage related costs, such as utility bills, council tax and other household expenses.
Drewberry found that 52 per cent of individuals and couples only look to insure their monthly repayments, with no additional protection for other essential monthly costs. Interestingly it is individuals aged under-35 that are more likely to take out additional protection than their older counterparts.
It was found that 57 per cent of borrowers aged under-35 opted for further protection as compared to only 41 per cent of those aged 35 or older. This younger age group could be more cautious and protection focused with many individuals starting families, buying their first home and having a lower level of savings to fall back on.
With such a large proportion of mortgage borrowers only insuring their repayments there is a significant risk of financial hardship should they have to cease working. Other monthly costs would have to be met either by running down savings, borrowing from friends and family or turning to their overdrafts and credit cards.