I have been looking online for mortgage payment protection insurance and all the plans seem to have this unemployment exclusion period, what does mean?
Mortgage Payment Protection Insurance (MPPI) plans tend to come with an initial unemployment exclusion period when this cover is first taken out.
Firstly, it is important to note that the exclusion period is different to the policy deferred period, which is the length of time you would need to be out of work before the plan starts to accumulate benefit.
What is the Unemployment Exclusion Period?
To protect themselves from adverse selection, MPPI insurers tend to place an exclusion period on the ability to make a claim for unemployment / redundancy.
During the exclusion period it is not possible to make an unemployment claim if you are made redundant or informed of your potential redundancy (i.e. you are put ‘on risk’ or your company announces that members of your department are to be made redundant).
The exclusion period usually ranges from 90 days to 120 days, depending on the insurer, and only applies for this initial period after taking out cover.
Switching from Another Insurer?
If you already have cover and are simply reviewing your existing cover with the view to switching if a better deal is available many (but not all) insurers will waiver part or all of the initial unemployment exclusion period. Please contact us so a suitable plan with this feature can be arranged.
Taking Out a New Mortgage?
If you are looking to cover a new mortgage or re-mortgage then the risk of adverse selection for the insurer is much reduced and, as a result, some insurers will reduce the initial unemployment exclusion period to 30 or 60 days (provided that the cover start date falls within 30 days of your mortgage being taken out).
Please contact us so a suitable plan with this feature can be arranged.