Our secret shopper is a local government officer, aged 30, female, living in southwest London. Her mortgage is £360 monthly
Anyone looking to take out insurance to cover their mortgage payments could be forgiven for going straight back to their mortgage lender to arrange cover. That is what happens in most cases. But brokers and direct insurers are eager to attract this business. But are they up to it? To see past the hype, Claire Veares posed as a homeowner and approached different types of provider for the most suitable mortgage payment protection insurance for her situation
The Broker
In a business directory of southwest London, there is just one entry mentioning MPPI.
Who does it: HS Coleman Insurance Services of Colliers Wood.
What's on offer: The MPPI policy it offers pays out following three months of unemployment or sickness. The premium quoted was "£6 or £7 for each hundred pounds worth of cover", making the premium for a £360 a month mortgage about £25.20 a month. To get cover, which starts paying out after just a month, this premium would rise to £45 a month.
Who else: Gamble & Co of Wimbledon came back with a figure of £25.02 a month. The broker did not have details of the policy and said it would post them on. The details never arrived.
Direct
Trying to get cover direct proved no more straightforward than trying to find it through a general insurance broker. Traditional mortgage lenders such as Abbey National and Halifax quote only for mortgages already taken out through them. Direct Line does not offer MPPI and a call to Royal & SunAlliance's direct arm, More Th>n, also drew a blank.
Who does it: Norwich Union Direct
What's on offer: It offers six options for those wanting to get insurance for their mortgage payments. Quotes were given after about ten minutes' thorough questioning. Taking the £360 a month figure again the options were: accident, sickness and unemployment - 12 months cover with a 60-day excess period for £16.55 a month. To have this with a 60-day franchise, the rate rose to £23.15 a month.
With the excess version, payment starts from the 61st day of unemployment or sickness - the franchise version pays out from the start of the claim once 60 consecutive days of unemployment or sickness have elapsed.
Other choices were 18 months of benefit with a 60-day excess - £22.21 a month or 12 months cover with a 30-day excess for £20.25, accident and sickness cover with a 30-day excess for £16.44 and unemployment cover for £15.65.
Online
A search on the internet turned up some providers, but not all managed to come up with a rough quote online. After a good ten minutes spent working through the quote application form on www.a-payment-protection-website.co.uk all that came up was an error message.
Who does it: Pinnacle Insurance offers a product called Helpupay.
What's on offer: The standard policy has a 30-day excess, while the back to day one version has a 30-day franchise. For a £360 a month mortgage, the standard policy is £11.73 a month to cover accident, sickness and unemployment. Back to day one for the same level of cover works out at £12.70 a month.
Who else: Goodfellows' mortgagesafetynet product costs £3.95 a month per £100 of cover for accident, sickness and unemployment making £360 worth of cover £14.22 a month. The policy offers back to day one benefits after 30 days. Cover is free for the first three months.
A qualifying period before the policyholder enters the excess or franchise period is also common. This seeks to deter people who know they about to lose jobs from taking out cover. Typical qualifying periods are 60 or 90 days.
