Mortgage payment protection insurance has been the subject of much speculation about its future, how it stacks up to income protection policies and whether it has a role to play.
Unfortunately the acronyms for short-term income protection and long-term income protection, STIP and LTIP, sound like names of Ikea shelving units and not valuable aspects of an individual’s protection needs.
And since the concept became embroiled in the payment protection insurance mis-selling scandal, providers have been trying to distance the product by changing the name and de-coupling it from the mortgage.
But for those who have become unemployed or are off work through accident or sickness, the money and advice that these policies provide have been invaluable – benefits that probably never make the news.
On April 6 new rules came into being from the Competition Commission that suggest there is still a future for the protection product. After all why introduce rules rather than ban the sale of MPPI altogether?
For me it’s a simple sale. People know that they can be off work because they have lost their job – the age of austerity has bitten in some parts of the country and many would have been better off if they had had an MPPI policy. People still get sick and accidents happen.
The new rules are in place to give customers time to consider their options and the opportunity to shop around.
So long as the adviser has made it clear that not all policies are the same and the customer should not be comparing policies on price alone, there is nothing for advisers who quote on good quality products to fear.
The money and advice these policies have provided has been invaluable – benefits that never make the news
How are providers helping? Well many have updated their systems to guide users on the new rules and some have gone as far as to help with diary reminders. But ultimately it’s up to advisers to make sure their records are up-to-date, with a note of the mortgage or non-mortgage connection, date and time of quote, date of mortgage offer, date of follow-up and when the customer got the protection in place.
Intermediaries need to be more aware of timing than before but the key issue is to be aware of whether the customer needs the cover and is eligible to benefit from the peace of mind that MPPI can offer.
As providers will be writing to policyholders on the anniversary of the cover being taken out, there are bound to be questions raised about what the client feels they have been paying for and sellers need to be positive about the product.
It has saved many from repossession and made the impact of redundancy easier to manage.
Providers have helped them find a new job through CV advice and job databases, and with stress being included as a covered condition, it’s given consumers much-needed time to come to terms with the pressures of the economic climate.
The media reports cases where cover was sold inappropriately, but rarely report on those people kept their home and got back into employment with the help of MPPI.
There are too many customers financially at risk who need the help of an intermediary population that is awake to the risks the current economic landscape presents.