The mortgage & lifestyle protection plan provides cover against accident, sickness and unemployment. Policyholders can choose accident & sickness cover or accident, sickness & unemployment cover but not unemployment-only cover. They may use the policy to cover a mortgage, living expenses on a level or index-linked basis, or a combination of both. Mortgage cover and living expenses cover can have different terms, as policyholders may still need living expenses cover when their mortgage term has ended.
Most MPPI policies pay out for 12 or 24 months, so they could stop while the policyholder still needs cover. This policy differs in that accident and sickness cover pays out for as long as it is needed. Policyholders can claims as many times as they need to, even for the same conditions. It is also based on an own occupation basis, which is less onerous than some policies, which pay out only if policyholders cannot do a suited job or any job.
This plan’s optional unemployment cover pays out for up to 36 months during the life of the plan, but is limited to a maximum of 12 months for each claim.
Premiums are underwritten so that they depend on factors such as age, gender, occupation and smoking status. However, they are guaranteed so policyholders do not face any premium reviews or age-banded increases, unlike some plans where premiums may increase in the future.
Premiums will increase where index-linked living expenses cover is chosen, but this will be at the same rate as the cover to reflect the inflation proofing.
Options can be added or removed if the policyholder’s circumstances change. This is subject to underwriting to determine the new premium level. The policy also caters for career breaks or homemakers, with a maximum benefit of £1,500 a month. In all other cases, the total maximum benefit is 50 per cent of gross annual income subject to a £50,000 maximum.
This plan received a five-star rating from Defaqto when compared against other MPPI policies, as Defaqto feels it is clear what is provided and what it costs. MPPI has received some bad press over the last couple of years, as the FSA has issued fines to companies that have been found to mislead customers. Sales of policies have fallen, but innovative products such as this, which strive to treat customers fairly, may help to restore confidence. However, a lack of unemployment-only cover may be disappointing for some clients.