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Payment Protection Could be Your Saviour

Aug 29, 2008
Payment protection policies can be your saviour if you were to lose your income after becoming unemployed or suffering an illness or an accident. You would be able to claim on the policy after a fixed period of time which is stated in the terms and conditions of the policy. The payment you would receive would keep your head above water while you looked around for work or recovered after being unfit for work.

You are able to take out a payment protection policy based on your circumstances. The options are covering your essential outgoings with income payment insurance, your mortgage with mortgage protection or loan repayments with mortgage cover. All three policies ask you pay a premium each month based on the amount you want to protect and your age. This means that that the younger age group are able to make the most savings and can now afford to protect what is often a huge borrowing which stretches their budget to the maximum.

If you go with a standalone payment protection specialist as opposed to taking out the cover when borrowing you get the cheapest premiums. You do have to compare the small print along with the cost as all policies vary. Some policies pay after just 30 days while others could ask you wait up to 90 days. Policies can continue for as long as 24 months with others it can be for 12 months, while is usually adequate time. After the period of time they simply expire.

Mortgage payment protection is extremely valuable as it could mean the difference between you losing your home and keeping it. If you were to be unable to pay your mortgage and you fell into arrears then the lender could take you to court to seek possession of your home. With mortgage protection to fall back on you would have the sum of money, tax-free that you insured when you took out the policy. This would then be used to continue paying your mortgage repayments without worry.

Loan repayments along with credit card repayments could be covered by loan payment insurance and helps maintain your credit status and stops the lender from taking you to court. If you wanted peace of mind that you would have a replacement income up to so much of your own lost income then income insurance could be taken out. You would then be able to keep up with loan and mortgage repayments along with all of your other essential outgoings. Payment protection premiums are usually based on the amount that you wish to cover and your age. An age based policy means that the younger you are when you take out the cover then the bigger savings you are able to make. With mortgage payment insurance you can also choose the level of protection you need. You might just want to take out protection for accident and sickness only. Or you could just take out cover for unemployment only. This would also help to keep down the cost of protecting the roof over your head.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of payment protection.
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