MPPI Benefit Insured Clarification
In relation to Policies NUI/PS/001 and NUI/PS/003 (underwritten by Aviva Insurance Limited)
August 2009
As part of our commitment to Treating Customers Fairly, we want to ensure that our MPPI NUI/PS/001 and NUI/PS/003 policyholders understand how their Mortgage Payment Protection Insurance (MPPI) policy works, in particular their benefit entitlement at point of claim. We are therefore writing to these policyholders to clarify benefit insured clauses, and to ask that they review their MPPI policy to ensure their benefit matches their mortgage payments to meet their ongoing demands and needs.
Our MPPI Terms & Conditions (NUI/PS/001 and NUI/PS/003) explain that the monthly benefit insured is the total amount of cover the policyholder has selected under the policy to protect their monthly mortgage repayments, plus any mortgage-related insurance premiums and any additional cover, if selected. Therefore the monthly benefit entitlement at point of claim, including additional cover, will reduce if a customer's mortgage payment has reduced, or reduces during their claim.
Please note: MortgageProtector (NUI/PS/002) and MortgageProtector Solo (PI/PS/001) policyholders are not included in the customer mailing with regards to clarification of the benefit insured clause.
What does this mean?
As many customers are now enjoying significantly lower mortgage rates, such as those with a tracker or variable rate mortgage, they may be paying for more MPPI cover than they could claim for.
At the point of any claim, Paymentshield will:
- Compare the customer's benefit amount insured under their MPPI policy with their actual mortgage payments and any mortgage related premiums.
- We will reduce the monthly benefit insured including the additional benefit (i.e. the amount of benefit payable to a customer during a claim) if their actual mortgage payment has reduced from that shown on their Certificate of Cover for NUI/PS/001 or NUI/PS/003 MPPI policies.
- We will refund all overpaid premium to customers, dating back to the point at which their mortgage payment was reduced.
- If a refund of overpaid premium occurs at the point of claim, then there will be a corresponding adjustment on your commission statement to retrieve any overpayment in commission.
What do your customers need to do?
- Review the amount of monthly benefit insured on a regular basis to ensure that it is correct.
- If their monthly mortgage repayment has reduced or increased, they should call us to amend the insured benefit on their policy. Their monthly premiums will change in line with any changes to the benefit insured.
- If their monthly mortgage repayments have not changed, they do not need to take action now.
Additional information
- Paymentshield has no way of automatically increasing or decreasing customers' benefits when their monthly mortgage repayments go up or down. We rely on our policyholders to tell us of any changes they need to make to their cover.
- If a mortgage lender increases a customer's mortgage repayment due to an interest rate increase, the customer must notify Paymentshield within 30 days of the increase to ensure that the increase is applied with immediate effect. If they do not tell us within 30 days of the change, a 90 day amendment period will apply before their benefit insured increases. When a change is made, premiums will also increase inline with any increases in benefit.
- Any amendments to increase the monthly benefit insured which are not as a result of an interest rate increase are subject to a 90 day amendment period. Premiums will also increase inline with any increases in benefit.
- Any amendment to decrease the monthly benefit insured will be applied with immediate effect. Premiums will decrease inline with any reduction of benefit.
- If customers do not tell us when their mortgage payment increases, they will not be fully protected in the event they need to claim.
- Additional cover is a percentage of the monthly mortgage payment and mortgage related insurance costs, therefore the additional cover benefit will vary inline with any increase or decrease to a customer's mortgage payment and mortgage related insurance costs.
- Brokers should highlight to customers, at the point of sale, that MPPI is to protect a customer's mortgage payment and therefore the benefit will be reduced at point of claim if the customer's mortgage payment has reduced. Please refer to the Policy Summary and Policy Document for full details of how the policies operate.
- Paymentshield will not cross-sell any of our other products or services to your customers as a result of this communication to policyholders.
If you would like to talk more information, please call our Broker Support Team on:
T: 0845 0615 100
E: brokers@paymentshield.co.uk
Lines are open:
8.00am - 7.00pm, Monday to Friday
8.00am - 1.00pm, Saturday
This page is intended solely for the attention of Directly Authorised or Exempt Firms as defined by the Financial Services Authority.