Is it worth having Mortgage Payment Protection Insurance?

Following on from my earlier article on Mortgage Payment Protection Insurance, I am going to address here the question of whether it is worthwhile taking out mortgage payment protection insurance when you take out your mortgage.

Unlike some insurance, Mortgage Payment Protection Insurance is not a legal requirement, but it does offer peace of mind if you are worried about the alternative. Choosing the right level of mortgage protection can be a good way to protect yourself from building up debt on your mortgage repayment. An alternative to MPPI might be unemployment cover, or accident and sickness cover which can be cheaper, depending on your personal circumstances.

Questions you should ask yourself when making a decision on MPPI are as follows:

• Should sickness or an accident stop you working, does your employer pay out good sick pay? If so, this could help with the mortgage repayments anyway.
• If you faced redundancy, how big would your pay out be? Could it keep you going long enough to pay the mortgage whilst you find a new job?
• Are you self-employed? Some mortgage policies now cover those who are self-employed if business ceases to trade due to factors out of their control. Check this out.
• Have you got savings which could cover your mortgage repayments, should you become unable to work for a period of time. Mortgage payment protection insurance only lasts a year, meaning maximum payout would be 12 times your mortgage repayments.