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February 26, 2008    

Launch of tailored mortgage protection

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by Gill Montia

Shepherds Friendly, the Manchester-based friendly society, is launching a new Mortgage Payment Protection Insurance (MPPI) policy that can provide cover for the term of an individual mortgage product.

The policy can be extended to a maximum of five years, compared with the more usual 12 months, so that policyholders are covered for the full-term of their mortgage. For example, a three-year fixed-rate, or four-year discounted tracker product.

The policy is reviewed at the end of the chosen period and can be amended to reflect a new mortgage, thus ensuring the level of cover always meets the customer’s needs.

According to Shepherds, there are over 20 million PPI policies in the UK, but currently only 20% of claims are successful.

MPPI, in particular, has received heavy criticism from consumer groups and the Financial Services Authority for having been mis-sold.

The Shepherds policy is set up via tele-underwriting by a qualified nurse at the time of sale, which removes the need for a customer to discuss their medical history with a financial advisor.

Premiums start at £2.07 per month per £100 for an 18-30 year looking for one year of cover, rising to £2.27 per month for those looking for five years’ cover.

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