Berkely Alexander has introduced freesafe, a mortgage payment protection insurance (MPPI) product that provides six months' free cover for new borrowers.
Freesafe allows policyholders to choose the type of cover they require. They can choose unemployment only cover or accident sickness and unemployment cover, with a waiting period of 30 or 60 days. They can also decide how long the benefit is to be paid, from a choice of either 12 months or 24 months.
Premiums start at £3 per £100 of benefit, for which policyholders get accident, sickness and unemployment, or unemployment-only cover with a 60-day waiting period and a benefit period of 12 months. Premiums are higher for accident sickness and unemployment cover, if the waiting period is shorter and the benefit period is longer.
The highest premium is £6.10 per £100 of benefit, which provides accident, sickness and unemployment cover with a 30-day waiting period and a benefit period of 24 months. For all options, cover is back to day one and the maximum benefit is £1,500 a month or 65 per cent of salary, whichever is lower.
Berkeley Alexander's product has lower premiums than mortgage care from The Mortgage Business, which provides cover from £3.75 per £100 of benefit. However, the maximum waiting period is 45 days with The Mortgage Business, compared to 60 days with Berkely Alexander. This explains why the lowest level of cover is cheaper with Berkley Alexander.
Unemployment-only back to day one cover, with a 30 day waiting period and a 12 month benefit period, would cost £3.25 per £100 of benefit with Berkeley Alexander and £4.68 with The Mortgage Business.