For people who might have stretched themselves financially with their mortgage it is probably even more important to be covered in the event of unforeseen unemployment. Good policies will cover any bills related to your mortgage - including interest and repayments.The State benefits for people in this situation are limited and they are means tested, so if you have savings you would be expected to use them first. Payouts can also take around 9 months to be made.
A good MPPI policy will start to pay one month after you are out of work (either through illness or redundancy) and typically last for 12 months. The one-year period is the time expected to be taken by people to find other employment or recover from illness or injury.
Insurance payments should start once you inform your provider that you're out of work and this is verified. Payments are usually made directly to your mortgage lender, although in some cases payments are made to the customer.
Although costs can vary between different providers, it is usually by a small amount. On an average mortgage payment of £650 a month, cover sold by most banks and building societies would cost about £450 a year.
Most people tend to buy MPPI from their mortgage lender at the time of the transaction or through a broker/adviser, but it can be bought as a stand-alone product from any provider. A list of MPPI providers can be obtained from the Association of British Insurer's website.
As with all types of insurance available, remember to shop around and be wary of lenders who insist on selling you their insurance.
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