‘We want to see evidence that protection has been sold separately from a mortgage giving people the chance to make an informed decision about their insurance needs,’ says Fritz.
You should complain in the first instance to whoever sold you it or your lender. If the matter isn’t resolved to your satisfaction contact the Financial Services Ombudsman to seek redress.
‘Income protection insurance is nearly always a better option,’ says Theresa Fritz. ‘It’s designed to cover the cost of your outgoings if you are sick and cannot work for a long period of time. You will usually be covered until retirement age.’
‘It costs no more than MPPI but provides much better benefits. And unlike MPPI it’s sold by an independent financial adviser who will explain the cover and because it has to be underwritten by an insurer - it will be appropriate to your circumstances.’ However Fritz says income protection does not cover redundancy but you can add this on for an extra cost, or take out a standalone policy.
Income protection insurance is a good option if you’re self-employed regardless of whether or not you have a mortgage, since it will protect your income and lifestyle if you are ill or have an accident. If you work for yourself and have a mortgage then it is even more important, since if you are unable to meet repayments, you will lose your home.
* Check the terms on which your employer pays sick pay if you suffer a long-term illness or disabling accident. Defer an income protection policy to pay out after this period.
* Create an advance position of saving up at least three months’ mortgage payments or by paying off three months in advance.
* Keep money in a flexible savings plan so you can get at the money if you need it.
* Don’t leave yourself unprotected – it’s worth seeing an independent financial adviser who can look over your entire protection and financial planning needs. Find three IFAs local to you at www.unbiased.co.uk.
* Finally MPPI is better than no income protection at all, says Which?.
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