Cost of premiums

If your finances are tight then paying out for yet another insurance product may just seem like one expense too many. Then again think how much tighter things would be if you or your partner were unable to work.

The amount you have to pay to protect your mortgage depends partly on the policy details (usually the number of exclusions to the policy) and partly on the size of your monthly mortgage repayments. You may also be able to find introductory discount offers or even a fee-free period. You can also find additional benefits such as assistance in finding work when you become unemployed.

The cost of MPPI is usually quoted as an amount per £100 of benefit. In other words, it may cost £6 for each £100 of your monthly mortgage repayments. If you pay £750 per month on your mortgage, then your MPPI payment in this instance would be £45 (which is equal to £6 multiplied by 7.5).

The costs of payment protection vary depending on the type of loan you have taken. Credit cards, with their low maximum borrowing limits, are generally the cheapest to insure. It is possible to get PPI for less than £1 per £100. Mortgage PPI can cost anything from £3 to £9 per £100 of borrowing. You should always check the policy details, but policies costing much over £5 per £100 of cover would seem to be quite expensive.

It is always a good idea to shop around and find the best deal for you - as with everything, some providers are more competitive than others.