MetLife has launched a new income protection plan (through a select panel of intermediaries only at this stage) that covers some or all mortgage payments - up to a maximum of £1,500 per month - for up to 12 or 24 months. Premiums are based on age, policy term, smoker status and BMI (body mass index).
MortgageSafe is available to new or old homeowners, and offers a choice of three levels of cover:
Core. Accident only cover; pays up to 12 months.
Essential12. Adds illness cover too; max 12 months’ benefit.
Essential24. As Essential 12 but maximum 24 month benefit period.
There is no medical underwriting for accident cover only, but those wanting both accident and illness cover will be required to answer five health questions. Applications do not require GP reports, income or financial underwriting or family history.
If a customer is unable to work for at least four weeks they can claim benefit paid back to day one. Payments can be made direct to the lender, if preferred. Customers can also choose to add optional child cover onto their policy for an additional £3 a month. This pays a lump sum if an eligible child suffers a broken bone, stays in a UK hospital or is diagnosed with cancer – excluding less advanced cases. The sum paid out varies from £100-£10,000 depending on the condition and also pays £24 a day (max 90 days and only after the policy has been in force for one year) if the child is hospitalised. MetLife reported it paid out almost 4,000 claims for children last year.
Pre-existing conditions are excluded as are other usual exclusions. However, also excluded are incidents ‘where alcohol was a significant factor’, ‘contests of speed’, fighting and illegal acts, including road traffic offences. Unlike most similar policies, MortgageSafe is written as a long term contract, so premiums are not subject to IPT.
While currently only available via a select panel of intermediaries, MetLife expects to roll MortgageSafe out to more intermediaries later this year.
Comment: Since the virtual demise of MPPI (mortgage payment protection insurance) due to the PPI missellling scandal, millions of mortgages have been all but unprotected, except for life cover and, to a lesser extent, critical illness cover. Income protection sales have of late risen significantly but relatively little of that is directly related to mortgages.
MetLife’s new product is similar to MPPI/sickness and accident cover (with no unemployment cover option) but under another name but, with that name now being pretty toxic, that’s important too. The important thing about MPPI wasn’t that the product was poor, more that it was overpriced and oversold and, being general insurance, it didn’t offer the certainty of long term cover. This plan, as a long term contract, does.
MortgageSafe is simple and offers three cover choices plus optional child cover. Child cover is inexpensive but offers a handful of useful financial benefits. For the main plan, benefits are relatively limited but even so, the plan should cover most mortgages and is quick and easy to set up.
The list of exclusions is quite long and if you crash your car while speeding may not pay out but otherwise cover is pretty standard for this type of cover. Unlike MPPI/ASU, unemployment cover is not available, but in recent months that has been rather hard to find anywhere anyway.
Full long term income protection is still a more comprehensive solution, but plans such as this have a place and are much better than having no cover – which is where most homebuyers are today. So, for advisers, there is now another option and a client could always start with this type of cover and then switch to longer benefit term IP later on.
Plus points: Simple sickness and accident cover with a choice of three cover levels; Pays benefits for up to two years; Inexpensive; No initial underwriting; Child cover offers useful benefits; Written as a long-term contract so no IPT on premiums and cover/terms cannot be changed by the insurer.
Not so plus points: No unemployment cover option; Maximum benefit £1,500pm; Long list of exclusions; No third party services mentioned.
Rating (max 10): Overall: 7.5. Silver
Tags: IP; MetLife
I Mark: No
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