Mortgage payment protection insurance (MPPI) is a type of insurance that is designed to help homeowners keep up with their mortgage payments in the event of unforeseen circumstances such as redundancy, illness, or accident. The insurance will cover the cost of your mortgage payments for a set period, giving you peace of mind and financial security during times of difficulty. However, is MPPI worth the investment? Here are some factors to consider:
Consider your current financial situation
If you have enough savings to cover your mortgage payments for a few months, then MPPI may not be necessary. However, if you have little savings and rely on your monthly income to pay your mortgage, then MPPI may be a wise investment.
Consider the level of risk in your profession
If your job is relatively stable and secure, then the risk of redundancy or job loss may be low. However, if you work in a profession with a high level of risk, such as construction or oil and gas, then MPPI may be a worthwhile investment.
Compare the cost of MPPI to the cost of defaulting on your mortgage
MPPI can be a costly investment, so it's essential to weigh up the cost of the insurance against the potential cost of defaulting on your mortgage. If you were to fall behind on your mortgage payments, you might face repossession of your home and damage to your credit rating.
Check your existing insurance policies
You may already have insurance policies that cover loss of income or redundancy. It's important to check these policies before investing in MPPI to avoid paying for duplicate cover.
Understand the terms and conditions of MPPI
Like all insurance policies, MPPI comes with terms and conditions that you need to understand. For example, there may be a waiting period before you can claim, and some policies may only cover a portion of your mortgage payment.
So, is MPPI worth the investment? It ultimately depends on your individual circumstances. If you're self-employed or work in a high-risk profession, or have limited savings, then MPPI may be a wise investment. However, if you have a stable job and enough savings to cover a few months of mortgage payments, then you may not need MPPI.
If you're unsure whether MPPI is right for you, it's always a good idea to speak to a financial advisor. A financial advisor can help you understand your options, evaluate the risks and benefits, and provide advice on the best way to protect your financial future. Additionally, if you're interested in retirement planning services, a financial advisor can also assist you in creating a financial plan that ensures you're able to retire comfortably.
While MPPI can provide peace of mind and financial security, it's important to carefully evaluate your circumstances before investing in this insurance. Consider your current financial situation, the level of risk in your profession, the cost of MPPI compared to the cost of defaulting on your mortgage, and the terms and conditions of the policy. If you're unsure, speak to a financial advisor who can provide expert advice on the best course of action for your unique situation.