Mortgage protection being sold to the 'wrong people'

Wednesday, 30 January 2008 12:00

Self-employed homeowners have been identified as the most likely to benefit from taking out mortgage payment protection insurance (MPPI).

Concerns that the cover could be sold to "the wrong people" have prompted an insurance consultant to issue advice on insuring home loan payments, which includes pinpointing those who will profit, and those who won't.

And for borrowers who would benefit from an MPPI policy, a cafeteria-style protection plan has been singled out as the best option.

Mortgage protection policies are a form of life insurance taken out by people for the duration of their mortgage to ensure that, if they cannot make the repayments, the costs are covered.

Paul White, a consultant for Belgravia Insurance Consultants said it was a "very important" form of cover but only for the right people.

He said: "The problem is that it is being sold to the wrong people. For example, a policeman wouldn't need it as they have excellent sickness benefits and are extremely well covered. The self employed definitely need it."

While stand-alone policies exist catering purely for MPPI, Mr White suggests borrowers should opt for a cafeteria-style plan which allows customers to choose elements of a particular plan to best suit their circumstances.

However, he added a warning: "The difficulty with that is that X, Y, Z provider may not be the best in the particular field that you are trying to cover on."

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