Compare IP and MPPI

The Key Differences Between Income Protection and MPPI

Mortgage Payment Protection Insurance and Income Protection are sometimes perceived as being the same. In fact they are quite different.

Mortgage Payment Protection Insurance is designed to give a monthly payment to meet mortgage and mortgage related expenditure in the event of accident, sickness and/or involuntary unemployment. It is an insurance against short term incapacity and/or unemployment.

Income Protection is designed to pay out a tax free income to replace employed or self employed income which has ceased due to inability to work as a result of illness, injury or disability. It is an insurance against long term incapacity, without any unemployment option.

At a glance the differences are:

	MPPI	Income Protection
Maximum Cover	Mortgage and mortgage related expenditure up to an amount which varies by insurer, normally around £1500 per month.	Varies according to provider and amount of gross earnings. Typically up to two thirds of gross income
Maximum Payout Period	Normally 12 or 24 months	Indefinite cover until the earlier of: return to work, death or reaching an age specified at outset
Waiting Period	Normally 30 or 60 days	Choice of either 4, 8, 13, 26 or 52 weeks
What is covered	Incapacity due to accident or sickness and/or unemployment	Incapacity due to illness, injury or disability which leads to a loss of earnings
Exclusions	Existing medical conditions, pregnancy, back and stress conditions. Voluntary unemployment, dismissal, retirement and temporary contracts	Unemployment
Application Process	Short application with no medical details required	Detailed application process including information regarding income, occupation, hazardous pastimes as well as medical history