@iprotectinsure Initiative - Video 1
Video 1. Mortgage Payment Protection Insurance
Video commentary June 2011 
Hi, I’m Dennis Haggerty author of many published articles on Income Protection Insurance. Having studied this class of insurance in depth for several years and had the opportunity to learn from some of the leading figures in this industry, I would like to share my accumulated knowledge with you so you can decide if this type of insurance could really make a difference for you.
In this first video I am going to focus on the most popular protection product called Mortgage Payment Protection Insurance (extract taken from a new video series currently in production).
I see my job as helping you to make an informed choice and not to be bamboozled by sales people into buying an insurance policy you don’t need.
Equally, I don’t want you to turn your back on a product that could be a financial lifesaver for you and your loved ones if you could not work.
I am speaking specifically in terms of your ability to pay your mortgage and other household expenses if you were unable to work for up to a year. Usually this results from redundancy, however this can also be the consequence of recovering from an accident or medical problem.
In the UK, literally hundreds of thousands of people have been helped by this type of cover. But.... and it is a huge BUT, an equal number of people who were sold this insurance when they took out a loan have been RIPPED OFF. The ONLY good thing I can report is that following several years of action taken by the Citizens Advice Bureau, the FSA and the Competition Commission, those organisations responsible for miss-selling Payment Protection Insurance are being forced to compensate all of their customers. Furthermore, new regulations prevent customers being miss-led and the way this product used to sold has been banned.
"It is time for consumers to be given a new and much better deal"
To start this new deal, I would like to offer you the following:
- The knowledge to understand if this product is right for you
- How to buy it at a value for money price. I am not talking of a few percent off here and there. No. There are massive differences in price. Even today there are people paying four times more than their neighbour for the same cover.
- A good understanding of the services providers offer and how they could help you if you need to claim on your policy in the future
The bad publicity associated with the miss-selling scandal has just about destroyed the reputation of Payment Protection Insurance. In contrast Mortgage Payment Protection Insurance as a product got a clean bill of health from the regulator. However, there has been an upside for the consumer who is now in a much stronger position than ever before. I can explain to you how you can benefit from this by making some informed choices.
The critical thing to understand is that the negative press coverage, marketing by the ‘compensation industry’ and the anti consumer behaviour of the big banks, has made it almost impossible to separate the now banned sales techniques from the value of the insurance cover itself. I want you to know the difference, especially because this cover is extremely useful for people with substantial monthly mortgage commitments and more.
So, even if you are sceptical, why should you have any interest in this type of insurance product? What would it offer you and why would you want it? Well, there is one all important fact, because they bought this cover, thousands of people who lost their jobs in this recession were paid out and continue to be paid out by their insurance companies every day. After 6 months of being unemployed, these payments can be the only means some people have to pay their critical bills and hold on to their home. With 2.5 million unemployed in the UK, there have been a lot of people, some of whom may have been your friends and neighbours, who were really pleased they had bought this cover before the recession struck.
I have read so many letters from people who really appreciated that their policy paid out every month, so they could then meet their bills,whilst they were looking for another job. Some stories were quite moving, indeed, I have interviewed staff dealing with Mortgage Payment Protection claims and the open and honest appreciation they have received from customers has moved many to tears. And that is from customers who were quite rightly collecting the money they were due. So why were they expressing such open thanks for receiving something they were entitled too?
Unless you have experienced this first hand, you probably find it hard to picture yourself in this position. The average family breadwinner may not have been out of work since they left full time education. Working over the years in one or several jobs, they would not only have received pay, but also thanks and acknowledgement for their achievements. With redundancy, this can be lost overnight.
They are left on their own to compete with thousands or unseen strangers in a tough job market. That is a lot to worry about. Now consider how worse it is to be in this position with mounting debts and under pressure from your mortgage company to pay them, as well as all of the other direct debits that immediately default when savings run dry.
Mortgage Payment Protection Insurance pays out in addition to any State Benefits such as Job Seekers Allowance the claimant is entitled to receive and is not subject to income tax. It can help stretch out existing savings that would otherwise be quickly used up. Bear in mind the average family of four needs £500 a week just to meet their regular outgoings.
Mortgage Payment Protection Insurance also helps people find another job. It is called a ‘back to work’ service and is paid for by the insurance company. It helps with things such as putting together a modern CV. They offer access to a national vacancies database and all of the things you would expect from an independent re-employment specialist. This service also offers someone to talk to, who understands what that person is going through, and, can tailor their service to the unemployed person’s individual needs.
This cover, like short term Income Protection Insurance, is not for wealthy people, simply because the wealthy have savings to cover them during an extended period of unemployment. It is designed for the average individual or family, especially young families, where their household budget is stretched tight and regular saving is impossible. Even people with limited savings realise that their money would soon run out with their mortgage and other household bills to pay each month. People in this position are vulnerable after two or three months out of work, when they can quickly fall into a dangerous spiral of debt.
Unfortunately, this means those people and their families who would gain the greatest benefit from this insurance, are the least likely to feel able to pay for it. Although this cover is less than a Sky TV subscription or a tank of petrol each month, it is a question of spending priorities. The harsh reality is that people who would otherwise need to spend their food budget on this insurance, simply cannot afford it. Occassionally a relative may step in and meet the premium if they realise just how financially vulnerable the family would be without it.
"With new redundancies being announced every day and 2.5 million people still looking for work, there is an urgent need to communicate to people in work that there is alternative financial protection available to them"
A lack of savings does not mean honest hard working families have to face awful financial problems or crippling debts if their breadwinner is out of work for six months or more. I simply ask you to think about buying this cover, in fact even if you decide to buy this insurance from a competitor of i:protect, I would far rather you are insured than risk everything if things go wrong...
Dennis Haggerty Income Protection Expert June 2011
______________________________________________________________________