The Mortgage Payment Protection Insurance Boom
Rising Unemployment and Poor Job Security Create Boom in Coverage
Jun 16, 2009
The global economic downturn has led to poor job security and rising unemployment in the U.S. Homeowners are understandably concerned regarding how they will make mortgage repayments should they be the victim of involuntary unemployment and are turning to Mortgage Payment Protection Insurance (MPPI).
Rising Unemployment Creates Huge Demand for Mortgage Payment Protection Insurance (MPPI)
The May 2009 report produced by the Bureau of Labor Statistics showed that the number of people without jobs has risen to 9.4%.This figure is expected to continue to grow for the remainder of the year. Rising unemployment has led to a substantial increase in the demand for Mortgage Payment Protection Insurance (MPPI).
What is Mortgage Payment Protection Insurance (MPPI)?
A Mortgage Payment Protection Insurance policy provides a homeowner with assistance in the event of involuntary unemployment. Once a period of deferment (normally three to six months) has elapsed, a homeowner is offered financial assistance with their mortgage repayments. This coverage continues until the insured either finds work or until a point specified in the policy. Most job-loss protection policies last for 12 months, although this does vary considerably between providers.
When Won't a Mortgage Payment Protection Insurance (MPPI) Pay-out?
- No job-loss protection policy will pay-out if a homeowner leaves their job by choice or is dismissed as a result of misconduct in the workplace.
- No financial assistance will be offered if the insured takes out insurance when they are privy to the fact that a series of redundancies will shortly be made.
- No Mortgage Payment Protection Insurance policy will provide immediate coverage which means that the deferment period will need to be satisfied before making a successful claim.
Mortgage Payment Protection Insurance for New Home Buyers through The Rainy Day Foundation
- The Rainy Day Foundation is a charitable organization in Washington DC.
- Job-loss protection is provided across America via 100 different builders and lenders. All lenders and builder contribute $500 into the scheme.
- Homeowners who buy their property from a participating lender can qualify for up to six months of assistance with their mortgage repayments. There is a cap of either $1,800 or $2,500.
- Help is provided during the first 2 years following home purchase.
The success of this scheme has led to other builders, such as Toll Bros, commencing their own version. With 250 building projects across 21 U.S. States, they are prepared to assist with mortgage repayments amounting to up to $2,500 for 6 months within the first two years only.
It is considerably harder to find a provider willing to offer Mortgage Payment Protection Insurance and premiums are higher to rising unemployment levels. Job-loss protection is not available for the self-employed. A period of time must elapse before help will be provided with making the mortgage repayments; this applied prior to the economic downturn.
Those that found this article useful may also be interested in taking out critical illness insurance or life cover to protect their families. Pet insurance can also help families save money on veterinary bills.
Sources
Harney, Kenneth (April 26, 2009). "As unemployment grows, mortgage payment protection programs gain popularity." LA Times.
Bureau of Labor Statistics - May 2009
Disclaimer: This article in no way attempts to give legal advice. One should consult a licensed insurance agent or other qualified professional for more information about property insurance.
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