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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.

  • 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
  • Permanent Total Disability due to accident or sickness rendering a debtor totally unable to follow any occupation for which they are reasonably suited by virtue of their training or experience. The disability must continue without interruption for at least six (6) months, in which case the insurance company will pay the loan installments falling due until the borrower is able to resume his or her occupation
  • 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
  • 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

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.

On borrower’s Death, Permanent Total Disability or Critical Illness, the claim shall become payable to the Bank. The required documents depend on nature of claim and include:

  • Duly completed claim form
  • In respect of permanent disability and critical illness, medical report from attending doctor
  • In case of retrenchment, letter from employer advising on retrenchment
  • In case of death, beneficiaries will present original Death Certificate and certified true copy of Burial Permit
  • Borrower’s Loan Repayment Statement from inception
  • Identification Document or Letter of Surrender of ID

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