Money News
Manchester-based friendly society, Shepherds Friendly, has announced the launch of a new MPPI accident and sickness policy that reflects individual mortgage product terms.
The policy provides up to 5 years of cover, compared with the more usual 12 months, so that it can provide cover for the full term of the special mortgage deal; i.e. 3-year fixed rate, 4-year discounted tracker etc. At the end of the special deal period the policy will be reviewed and amended to reflect the new mortgage deal and payments to ensure the level of cover always meets the customer's needs.
As Shepherds itself points out, there are over 20 million PPI policies in the UK, but currently only 20% of claims are successful, sparking regulatory bodies, including the FSA, to question the validity of these products. Mortgage Payment Protection Insurance (MPPI), in particular, has hit the headlines and made consumers wary after several policies and the way they were sold were found to mislead customers.
As for the Shepherds policy, it adopts tele-underwriting by a qualified nurse at the time of sale to ensure claims are dealt with quickly and efficiently. It also puts customers at ease and makes them feel more comfortable discussing their medical history as they don't need to discuss personal details with their financial advisor.
Shepherds is however advising all customers to seek advice from an independent financial advisor to find out if they have MPPI and what it covers to ensure that it is relevant for their particular mortgage.
Premiums start at £2.07 p.m. per £100 for an 18-30 year looking for 1 year of cover. This rises to £2.27 p.m. for those looking for 5 years of cover. Corresponding rates for 31-40 year olds are £2.27 and £2.84, while for 41-50 year olds they're £3.90 and £6.84. Finally for 51-60 year olds they're £6.63 and £15.94.
The benefit term is for the full amount of the policy term, but if a claim is made at any point in the final 6 months of the term then the benefits will be paid for a minimum of 9 months. Customers can choose the benefit to either be 100% or 130% of the monthly mortgage payment.
Available to people aged 18-60, minimum policy term is 1 year, maximum monthly benefit, £2,000. Customers aren't eligible for the policy if they aren't named on the mortgage, are working less than 16 hours a week or not currently working due to an illness.
25 February 2008 © Moneyextra.com
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