I don't think that there's a difference between LPI and PPI - in my knowledge. PPI/LPI is almost useless to you, as you "cannot work." In your wife's case it would probably be wise to take out PPI when she starts work - it is at this point that she has an insurable need. I don't think you can take out a PPI policy unless in work anyway, with most insurers. I also don't think that PPI will cover you if one of you died. It is set up as a policy that will cover your loan payments for a short term (usually 1 year) if you are unable to work through accident, sikness or involuntary unemployment. If the policy is set up in joint names then it will usually cover HALF the monthly payment each.
I'd suggest you read the small print or post a link to the policy summary for the insurer and we can have a look at it.