The family of payment protection insurance products are often very confusing. After all while policies will basically work in the same way when they payout and for how long they payout, they pay for different reasons. There are three types of policies that can be chosen from. These, depending on your circumstances would work in your favour if you were to fall sick and had to take time away from work. They would also provide benefit to the policy holder if they were to be unfortunate enough to be involved in an accident. Furthermore if you became unemployed then a policy could also provide you with an income tax-free.
The majority of individuals don't have the luxury of plenty of cash and have to take out a mortgage with a lender when we want to buy our home. Unless the mortgage payment is made each and every month without fail we break our agreement with the lender and face repossession. The lender could help in the short term for one missed payment, but if you were to have to take several months from work the chances are the lender would seek repossession.
However, if you have the backing of mortgage payment protection, you could turn to this after between 30 and 90 days of being unemployed or incapacitated due to accident or sickness. A policy would then allow you to pay a substantial part of your mortgage payment each month. You could take your chances by applying to the State for help. However, do not solely rely on them to provide your mortgage repayment as there are many terms and conditions you have to meet to be eligible. Even if you did manage to be able to claim, the benefit would only help with the first £100,000 of the interest on the mortgage.
If you were borrowing by way of credit cards as many people do, or if you have taken a loan, again the lender would want their monthly repayment. If you do not maintain it then you are facing at the very least your credit rating demise. Again loan payment protection insurance would step in and allow you to continue meeting your agreement with the lender.
Finally you could choose to take out income payment protection. This protects your overall income up to a certain amount each month. With a policy such as this behind you, you could keep up with all your outgoings. This would of course include your mortgage payment, loan/credit card repayment and any other essential monthly outgoings. You would not have to worry where you would get your bill money or duck and dive making changes to your lifestyle.
When looking for payment protection insurance you have to shop around just as you would with anything you were considering buying. It is only by comparing premiums for policies that you are able to get the cheapest. While you could take protection out when you borrow, this is not the cheapest way of buying what can be great peace of mind. When shopping for your policy always compare when the cover would begin and end. The majority start after 30 or 90 days and some providers will backdate cover to the first day. Providers can also offer 12 or 24 months protection, you can find how long a particular policy would pay and when it would begin in the terms and conditions.
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