Glossary · UK
What is Mortgage Payment Protection Insurance (MPPI)?
An insurance policy that covers mortgage repayments for a limited period if the policyholder cannot work due to accident, sickness or involuntary unemployment.
Full Definition
Mortgage Payment Protection Insurance (MPPI) is a standalone insurance policy, separate from a mortgage itself, that covers some or all of a borrower's monthly mortgage repayments for a limited period -- typically 12 or 24 months per claim -- if they are unable to work due to accident, sickness, or involuntary unemployment (redundancy), subject to an initial waiting period, commonly 30 to 90 days, before payments begin. MPPI is sold and priced independently of the mortgage lender, unlike the mis-sold Payment Protection Insurance of the 1990s and 2000s that was often bundled with the loan itself and charged as a single upfront premium; a genuine MPPI policy today is typically paid monthly, can usually be cancelled without penalty, and should have clearly disclosed eligibility criteria, such as exclusions for pre-existing medical conditions or self-employment restrictions that a buyer should check carefully before taking out cover. Because MPPI only pays out for a defined maximum period and does not cover every reason someone might miss a payment (voluntary resignation and pre-existing conditions are commonly excluded), it is often considered alongside, rather than instead of, broader income protection insurance, which can cover a wider range of essential outgoings for a longer period, or critical illness cover, which pays a lump sum on diagnosis of a specified serious illness rather than replacing income month by month.