Policy Summary
Mortgage Protection Insurance (MPI) is a Life Assurance Policy that pays out the mortgage balance if a certain event such as death, disability, retrenchment or critical illness occurs. If any of the insured event occurs, the insurance company pays the policy benefit directly to the lender leaving the borrower’s dependents with a home unencumbered by mortgage debt. The lender uses the compensation to offset the mortgage balance and if there is any left over this will be passed to the deceased’s estate.
Features of the product
Most mortgage lenders offer to arrange MPI for borrowers who qualify for mortgages. If the mortgage is in the joint names of the borrowers (e.g. spouses) the MPI should be arranged on joint life basis. It is convenient to arrange MPI through the lender as premiums are factored in the repayments. MPI is arranged to run for the same length of time as the mortgage period e.g. 15 term mortgage will have MPI running for 15 years. The cost of MPI (premiums) depends on factors such as amount of mortgage plus age and health of borrower.
Scope of cover VIB Mortgage Protection
- Death or permanent and total disability of the insured borrower
- Loss of employment due to retrenchment subject to the prescribed policy limits
- Critical illness of the insured borrower
- Maximum Age at entry is 70 years while retirement Age for all is 75 years
- Mortgage deposit guarantee insurance (MDGI)
- Loss of job due to retrenchment in which case the insurance will pay nine (9) monthly installments subject to a three (3) months’ waiting period applicable after the date when the borrower stopped working due to retrenchment. The maximum limit payable under this cover will be limited to KES.3 Million
- Critical illness cover of 30% of outstanding loan up to a maximum of KES. 5Million
Cover requirements
- Duly completed Application Form
- Medical examination shall be required for loans in excess of KES. 25M
- Loans up to KES. 25M will be automatically covered without medical reports
- Members who opt not to submit to medical examination will have cover restricted to KES.25M
