The company wanted to offer a product that could cover the full term of a fixed or discounted period for example up to a maximum of five years. At the end of this period, the policy will be reviewed and amended to reflect the new mortgage deal and payments.
This products aims to pay the chosen benefit which the policyholder will use to meet their monthly mortgage repayments if they are unable to work due to sickness or an accident. It does not cover unemployment.
The policy allows customers to opt for either 100 per cent or 130 per cent of the monthly mortgage payment, with the maximum monthly benefit set at £2,000. This cannot exceed 60 per cent of normal monthly income and will be paid after 30 days of consecutive disability either from accident or sickness. As it is a back-to day one policy, it will pay one month’s benefit on the 31st day.
Tele-underwriting by a qualified nurse at the time of sale will also ensure claims are dealt with quickly and efficiently, as all the required information will have been gathered already.
Shepherd’s Friendly says it wanted to restore trust in MPPI policies following the last 18 months of negative publicity, where the FSA has issued fines to companies that have been found to mislead customers and is continually assessing companies’ policies and procedures.
Its product stands out because it allows longer periods of cover to be chosen, but for those who opt for the one-year term, it may be possible to get cheaper cover elsewhere.
British Insurance’s age-related MPPI allows people to choose cover for accident and sickness only, unemployment only or both. Comparing premiums for accident and sickness only cover over a one-year term, premiums are cheaper across the board with British Insurance, even though it has more age bands than Shepherd’s Friendly.
For example, 18-25 year olds would pay £1.30 and 26-30-year olds would pay £1.65 for every £100 of monthly benefit with British Insurance. With Shepherds 18-30-year olds would pay £2.07. At the other end of the spectrum, 51-55-year olds would pay £3.40 and 56-60-year olds would pay £3.70 for every £100 of monthly benefit. With Shepherds, 51-60-year olds would pay £6.63.
However, the differences are marginal for people aged 31-40. They would pay £2.27 with Shepherd’s, while for British Insurance it is £1.95 aged 31-35 and £2.25 for ages 36-40.