Mortgage PPI benchmark

As a result of some mortgage lenders insisting on the purchase of non-competitive MPPI products, the Council of Mortgage Lenders (CML) and Association of British Insurers (ABI) have set out some minimum standards that they have agreed Mortgage PPI products should conform to. This is called the MPPI benchmark policy.

• The norm is for this type of insurance to cover accident, sickness and unemployment.
• A maximum of 60 days is permitted after a claim before payments commence, though you may not be able to claim within the first six months of taking the policy out. Many policies operate with 30-day deferral periods, but you will probably pay slightly more for this benefit.
• Policies must provide payment cover for at least 12 months after the deferral period. Again, some have longer minimum payout periods than this, but your premium will be higher.
• Some cases of medical conditions that were previously automatically excluded are now assessed individually.
• The self-employed and sole traders can now get PPI for mortgage payments, but only if you meet certain conditions. You must have declared to the Inland Revenue that your business has involuntarily ceased trading before you are able to claim. You must also be seeking jobseekers allowance.
• Contractors must have worked for their employer for at least two years. This can be the agency who finds you work - it does not have to be the same contract! Alternatively, you can usually claim if you have been working on a yearly contract that has been renewed at least once.
• If there are to be any changes in the cost or scope of the cover of your policy, the provider must give you notice in writing at least six months prior to any change.

Some of the more flexible policies allow:

• Joint cover for partners
• Increased cover in line with additional borrowings
• Increased cover in line with interest rate rises
• Payment breaks to correspond with mortgage repayment holidays

Whatever type of PPI product you are buying, you should always ask for a copy of the policy details before you sign up for anything.

Take the document away from the store or place where you are buying it from and have a good look through. Some companies may not like you doing this, as you can lose your right to the cancellation period if they can get you to sign up for their product on their premises.

If they are confident enough of their product then they should be comfortable with you taking it away for closer scrutiny.