Mortgage protection insurance not only helps you ensure that the mortgage payments are kept up to date, but can also avert the risk of repossession. It keeps your home safe, even when assorted misfortunes have temporarily snatched away your normal, regular income from work. Such threats to your home are perhaps more common – and therefore more likely – than you might imagine.

This is especially true in the current economic climate of recession. The Council of Mortgage Lenders, for example, has revealed that there was a 50% increase in the number of repossessions during the first quarter of 2009, compared to the same quarter last year, according to a report in the daily Telegraph newspaper on the 15th of May 2009. Although the actual number of repossessions during the first quarter of this year snatched away 12,800 homes, the Council of Mortgage Lenders has nevertheless also forecast that the annual total could reach 75,000.

No homeowner, of course, wants to be counted among that 75,000. Mortgage protection insurance remains one of the best ways of avoiding it. The way in which the insurance works couldn’t be a simpler way of protecting your home by ensuring that the mortgage repayments continue to be met. If you suffer an accident or illness and need to take unpaid time off work, or if your income dries up altogether following redundancy, the insurance pays out a regular, monthly benefit that can be guaranteed to pay the whole, or a proportion, of the monthly mortgage repayments. Policies generally incorporate an initial waiting, or “qualifying”, period of some 30 to 90 days, depending on the insurer chosen, after which the insured benefits are paid on the same date each month until normal working can be resumed and regular income restored, or for up to a typical maximum of 12 months, whichever is the shorter period.

Most homeowners, of course, will find that this full year of potential benefits is more than enough time in which to recover from an incapacity or to find another job. For prospective policy holders who feel that the interval might be inadequate, however, some insurers offer the option – on payment of an additional premium – of extending the maximum payout period to up to 24 months. This illustrates the point that premiums are, of course, directly related to the maximum period of benefit payments in the event of a claim – the shorter the period, the lower the potential liability for the insurer and, so, the cheaper the premiums that need to be paid.

The other deciding factor in the cost of the premiums, of course is the level of cover required – in other words the amount of mortgage repayments that need to be insured. Mortgage protection insurance is very flexible in this regard, too. It allows the protection of most sized mortgages, both large and small, up to a typical maximum of £1,500 a month, or the equivalent of 50% of the policy holder’s normally earned gross income from regular employment, whichever is the lesser amount.

Despite the poor name recently gained by the institutions of government in Britain today, a surprising number of people have a touching if misplaced faith in the welfare state being there for them when they need it. A classic example is the belief that state-funded benefits will continue to provide a comfortable income in the event of unemployment. However, unemployment cover from this source is not nearly as generous as many people might believe and is, indeed, considerably less than that available to the unemployed in several other countries.

A report in the Guardian newspaper on the 31st of May 2009, for instance, described how many middle and upper-income earners consider the unemployment benefit available in the shape of Job Seeker’s Allowance to be so low as to be hardly worth claiming. With the means-tested and age-related allowance varying between £50.95 and £64.30 a week, this is perhaps hardly surprising. It is a flat rate, completely disregarding the claimant’s previous level of earnings when in work and therefore ignores the likely needs and financial commitments of many unemployed.

Unemployment cover is far more generous amongst most of Britain’s neighbours. In France, for example, unemployment benefits are based on a percentage of the claimant’s previous income from work and there is a minimum rate of €26.66 (approximately £23) a day. In Germany and in Norway, too, the benefits are also calculated according to the claimant’s previous income, with 60% of that amount commonly paid out. Even in the United States – which is not known for its especially generous welfare benefits – average unemployment allowances are currently running at around £188 a week.

Britain’s relatively poor showing with respect to state-funded unemployment cover, therefore, has persuaded many people to opt for the more reliable and remunerative personal plan available in the shape of their own unemployment insurance. In return for a modest monthly premium, such insurance pays out a regular, tax-free, replacement monthly income in the event of the policy holder’s compulsory redundancy and throughout the period of temporary unemployment whilst searching for another job. The benefits are paid out for a typical maximum period of 12 months, although some policies offer the option (for an additional premium) of extending this maximum period to 24 months.

What is more, this form of unemployment cover can offer a genuinely replacement income to suit the policy holder’s individual needs and circumstances. The amount likely to be needed is decided from the outset and simply determines the cost of the premiums that will need to be paid, with benefits in direct proportion to the level of cover purchased. In this way, it is typically possible to arrange cover for up to 50% of the policy holder’s previous gross salary or £1,500 a month, whichever is the lesser amount.

Anyone in employment is likely to tell you that the regular monthly income from work is by no means a foregone conclusion. The steady inflow of income each month can be interrupted – for a longer or shorter time – for any number of reasons. Given the present state of the world economy, and Britain’s in particular, however, perhaps the greatest risk to the individual employee is posed by the threat of redundancy. There is much to be said, therefore, for making a start with unemployment protection.

If any evidence were needed for the widespread risk of redundancy it is necessary to look only as far as the national unemployment statistics. They presently stand at something over 2.2 million and further redundancies are forecast to push that total to way beyond three million during the course of the next 12 months or so. Few – if any – sectors of the labour market appear safe from the threat of redundancy.

Unemployment protection cannot actually make that threat disappear, of course, but it can provide the individual an element of financial security during whatever interval it takes to find alternative employment. A straight forward insurance policy pays out a predetermined monthly benefit, for use as a replacement income, soon after the policy holder has been made compulsorily redundant. There is an initial, brief “waiting period”, which can range from 30 to 90 days, depending on the particular cover chosen, and the payments are made either immediately after that interval, or, in some cases, backdated to the very first day of the policy holder’s redundancy.

This form of unemployment protection ensures that there is a regular, tax-free, replacement monthly income every month that the policy holder remains involuntarily unemployed, or for up to a typical maximum period of 12 months, whichever is the shorter period.

The amount that is paid in benefits will have been chosen by the policy holder from the outset and it is this, of course, that also determines the level of premiums to be paid. This allows unemployment protection to be entirely flexible in terms of its cost and the benefits paid out in the event of a claim. Generally, it is possible to insure as much as 50% of the policy holder’s normally earned gross income from work, or up to a typical £1,500 a month, whichever is the lesser amount.

Having started with unemployment protection, however, there is no need to stop there. For the payment of only a marginally increased premium each month, it is also possible to cover the risks of accidents and illnesses incapacitating the policy holder from work and therefore needing to take unpaid leave of absence. Such a combined accident, sickness and unemployment insurance policy thus offers cover against the principal threats to and interruption of regular income.

One of the worst things that can happen to any working individual is to lose his or her job. However much warning or advance notice might be given, it invariably comes as an unpleasant shock. It is then that the worries begin, not least of them being the individual’s ability to cope with the sudden and unexpected loss of the income that went with the job. Unemployment insurance, on the other hand, is designed to ensure that, despite the redundancy, there is still a reliable, regular, replacement income to count on during however long it might take to secure alternative employment.

Anyone who enjoys regular employment – that is to say, they currently hold a steady job and have worked regularly for at least the previous six months – is eligible for unemployment insurance. Provided they are resident in the UK, Channel Islands or Isle of Man and remain of normal working age and available for employment throughout the term of the insurance, cover can be arranged for the price of a remarkably modest monthly premium. Should redundancy then strike, the policy holder is guaranteed a regular, replacement monthly income paid by way of the insured benefits.

Unemployment insurance also aims to strike just the right balance between the cost of the monthly premiums and the security of the cover provided. First of all, payouts in the event of a claim will continue to be made every month that the policy holder remains involuntarily unemployed, or for up to a typical maximum of 12 months, whichever is the shorter period. The limitation on the number of such payments means that the insurer is able to contain the maximum liability due under the policy and this, in turn, allows premiums to be kept as low as possible.

The cost of premiums is also kept under the prospective policy holder’s own control to the extent that cover can be arranged for exactly the level of replacement income that is likely to be required. The price of the premiums, in fact, is expressed in terms of the cost per £100 of income insured. The policy holder therefore has complete choice in determining the level of income to be received in the event of a claim all the way up to the typical maximum permitted cover of £1,500 a month, or the equivalent of 50% of his or her normally earned gross income from employment, whichever is the lesser amount.

Unemployment insurance, therefore, arms the policy holder with a secure and reliable source of alternative income in the event of redundancy, allowing the worst to be faced with considerably greater peace of mind.

Many people are strangely wary of any kind of insurance. They argue that the particular risks covered by the relevant policy are so slender that the premiums paid represent poor value for money. In the present economic climate, however, and for a scenario that appears likely to be with us for some considerable time to come, there is one form of insurance that seems to weigh risks and benefits very competently indeed – its name is redundancy cover.

The country is experiencing the worst deflation since the Second World War. The economy is contracting rather than growing. This means that demand for goods and services is falling, even though prices are also tumbling. As a result, many companies are failing to find buyers for their products and services. Unable to continue to trading at a loss, therefore, firms are either declaring bankruptcy or, at the very least, needing to make many of their employees redundant.

The effects of this decline are seen in an unemployment total that has already reached 2.2 million and further redundancies are widely predicted to raise this figure to more than three million within the next 12 months. Many jobs are under the threat of redundancy, in other words, and effective redundancy cover is one of the safety measures most likely to be needed by very many employees.

It is likely to be needed because it is one of the most effective ways of ensuring practical financial support during the indefinite period of unemployment following redundancy. Backed by a simple and straight forward insurance policy, the cover provides a regular, tax-free, replacement monthly income in the event of the policy holder losing his or her job through no fault of their own. Not only that, but it continues to pay out guaranteed, insured benefits every month for as long as the policy holder is still searching for alternative employment, or for up to a typical maximum of 12 months, whichever happens sooner.

Redundancy cover, therefore, provides more than simple a single lump-sum payment, but a genuinely replacement income that can be spent each month just as the policy holder’s normal income from work could be spent. It is also sufficiently flexible to be tailored to each policy holder’s personal needs and circumstances, depending on whether more or less financial support is likely to be required during the time spent looking for alternative employment. The amount of income will, of course, depend on the level of premiums that the prospective policy holder is prepared to pay, with prices usually quoted in terms of the cost per £100 of income covered. In this way, it is usually possible to cover up to a typical maximum equivalent to 50% of the policy holder’s usual gross income from work, or £1,500 a month, whichever is the lesser amount.

Redundancy can be a lonely business. After what can be a number of years faithfully working for an employer, the blow of suddenly losing a job can strike very hard. It can leave the suddenly unemployed feeling up against the world all alone. Redundancy protection offers the comfort of knowing that there is welcome financial assistance right beside you, so that much of the hardship does not have to be faced alone.

Redundancy protection offers the most practical help possible by paying out a regular, replacement monthly income in the event of involuntary unemployment. What is more – and unlike any other redundancy package – it continues to pay out on a monthly basis all of the time that the policy holder remains unemployed, or for up to a typical maximum of 12 months, whichever is the shorter period. Not only is a whole year generally sufficient for most individuals to secure alternative employment, but the cap on 12 equal monthly payments means that the insurer, for his part, is also able to contain his maximum liability under the cover offered. This means that the monthly premiums paid by the policy holder can be the very lowest possible.

Although the premiums are low, however, this does not mean that the policy holder has to skimp on the level of replacement income insured. In fact choosing the appropriate level of income – which is clearly going to vary from individual to individual, depending on their respective needs during a temporary period of unemployment – couldn’t be easier. Premiums are quoted in terms of the price per £100 of replacement income guaranteed, so it is a simple question of choosing the relevant multiples of this figure, up to the typical maximum amount generally available of £1,500 a month, or the equivalent of 50% of the policy holder’s normally earned gross salary, whichever is the lesser amount.

Practically anyone can qualify for the comfort and peace of mind in knowing that any period of temporary unemployment will be shared at least with redundancy protection. Eligibility for such insurance is extended to anyone who is currently in regular employment and who has been working steadily for at least the previous six months. They will need to be resident in the United Kingdom, Channel Islands or Isle of Man and should, of course, remain available for employment and of normal working (pre-retirement) age, throughout the term of the insurance cover.

Redundancy protection might not resolve the immediate problem of joblessness, therefore, but it can certainly make the experience considerably less lonely and financially more secure.

For anyone currently in work, the future is probably looking quite uncertain. There are already 2.2 million people in the unemployment queue in Britain today and all estimates suggest that further redundancies will push that figure to well over 3 million during the course of the next year. With such uncertain times ahead, redundancy insurance can help take care of the working person’s financial future.

The country is in economic and political turmoil. An economic recession has turned into the worst period of deflation since the 1930s and the contracting markets have left many companies with empty order books and little option but to declare many staff redundant. The prospects for recovery are precarious and made all the worse by the current political scandal surrounding MPs expenses claims. Some commentators have spoken of a crisis in British democracy itself.

Whilst this bigger picture is of course important, the greatest fear and headache for the individual is the security of his or her own job. The best that can be said for practically any line of work is that the future remains uncertain. In an uncertain future, of course, unemployment is an ever constant threat and those intent on securing an element of security and stability will be giving serious consideration to redundancy insurance. This is a simple and straight forward insurance that guarantees a regular, replacement monthly income in the event of compulsory redundancy.

The insurance puts back a great deal of certainty into the future because, even in the event of temporary, involuntary unemployment, the policy will continue to pay out the insured monthly benefits for as long as the policy holder remains unemployed, or for up to a typical maximum of 12 months, whichever is the shorter period.

Redundancy insurance gives the comfort of knowing that, even if the axe should fall on your own job, there is the certain and reliable prospect of a regular income still coming in each month. Just how much of an income that will be is determined from the very outset by the amount of cover purchased by the policy holder. Premiums are invariably advertised in terms of the price for insuring each £100 of replacement income, so it is easy enough to calculate how much will be needed and how much the chosen level of cover will cost each month.

Redundancy insurance can be used to provide a wide range of replacement income levels, to return the whole, or just a proportion, of the day-to-day expenses needed in the event of an indefinite period of unemployment. The typical maximum level of income that can be arranged in this fashion is £1,500 a month, or the equivalent of 50% of the policy holder’s normally earned gross income, whichever is the lesser amount.

Normal, everyday life is impossible to sustain without some form of income. It is surprising, to say the least, therefore that so very few people appear to have given serious thought to alternative sources of income if they are unable to work because of some incapacity or if they become unemployed. But income protection insurance can offer a valuable life line.

Not only is the take-up of income protection very low, but two-thirds of those in work have either given no thought at all to how they would support themselves financially, or have a misplaced faith in apparent sources of support, should their income from normal working be temporarily snatched away.

Some of the imagined sources of so-called income protection, for example, are personal savings or financial assistance from friends and relations. If there was ever a time when such funding could be relied upon, it is unlikely to be true today, when interest rates have depressed much motivation to save. Neither the individual concerned, nor his friends or relations, therefore, is likely to savings on which to draw in an emergency.

Others might be convinced that the generosity of their employer will ensure that any financial difficulties are overcome in the event of an accident, sickness or unemployment. However, as companies themselves struggle to remain competitive in the current tightened economic climate, many sickness benefit schemes have been cut back or abandoned, whilst redundancy packages are unlikely to be as favourable as they once were.

There are even some individuals who continue to keep faith with the welfare state, believing that it can always be relied upon. The fact of the matter is only partially true, of course. Certainly, there are provisions for statutory sick pay, statutory redundancy pay and the Job Seekers Allowance for those who are unemployed. These might help, but in terms of effective income protection, none is likely to pay enough to allow more than the most basic level of subsistence.

The most reliable form of income protection, therefore, will be that backed by an individual insurance plan. Of course, this means paying a regular monthly premium, but the rates are very modest. In return, the policy holder is guaranteed a predetermined level of regular, replacement monthly income in the event of there becoming incapacitated for work or compulsorily redundant. The insured benefits are then paid every month until the policy holder is able to resume normal working, or for up to a typical maximum of 12 months, whichever comes first.

The amount of replacement income available under such an income protection plan is very much a matter of the policy holder’s choice. It is generally possible to insure up to a typical maximum of £1,500 a month, or the equivalent of 50% of the policy holder’s normally earned gross salary, whichever is the lesser amount.

It seems as though the future has never been more uncertain. It is anyone’s guess when – or if – the housing market will rally; it is a similarly open question as to when the deflated British economy might start growing again; and for the individual, the greatest question of all, of course, is whether they are still going to have a job this time next month. Maintaining an income could be a problem that income protection insurance can solve.

But the ever present threat of redundancy from firms that continue to struggle with empty order books and no ready access to borrowing is only one of the ways in which the individual’s regular, monthly income can be put at risk. Time off work can as easily arise from an accident or a prolonged illness. Although some employers might run a welcome sick-pay scheme during such times of crisis, the resulting income is likely to be substantially lower than usual and will, of course, cease altogether after maybe a matter of just a few months.

It is surprising, perhaps, how many people are caught out by such relatively common occurrences. Research conducted by the Department of Work and Pensions, for example, has shown that of the one million or so employees who call in sick each week, some 300,000 of them are still off work after six months. Accidents and illnesses take their toll on working time – and, just as importantly, on incomes – to a greater extent than many of us realise.

Income payment protection insurance, however, lives up to its billing at just such times. It offers a simple and reliable protection of an income simply by paying one out as an alternative, in the event of the policy holder being incapacitated for work or involuntarily unemployed. What is more, the insured benefits continue to be paid out every month that the policy holder remains off work or out of work, or for up to a typical maximum of 12 months, whichever is the shorter period. With some policies, it is possible to ensure a replacement income that continues to be paid out for up to a maximum of 24 months – although the monthly premiums for this enhanced level of protection will naturally cost rather more.

The income that you need to protect will, of course, vary from individual to individual. This poses no problem for income protection insurance, which is flexible enough to offer effective cover for practically any usually earned income. The level of cover is reflected in the cost of the monthly premiums paid and the latter are quoted in terms of the price per £100 of income paid out – so it is easy to calculate the number of multiples that might be needed. Generally, cover is available that produces a replacement monthly income of up to a typical maximum of £1,500 a month or the equivalent of 50% of the policy holder’s normally earned gross income, whichever is the lesser amount.

It might not look like a very common or realistic choice, but there are a surprising number of occasions when taking on a loan could also entail a choice between arranging adequate loan cover or facing insolvency. Being forced into defaulting on the repayments of a loan is one of the reasons for many people reaching that tipping point between keeping their debts under control and falling over the edge into unmanageable debt. Insolvency is reached when it is no longer possible to pay one’s debts as they fall due.

So, how can that situation arise when the borrower without loan cover is faced with little option but the stark choice of insolvency? Simply, it can arise when the agreed repayments can no longer be made. The most common reason for such an inability to make the repayments is because there is no longer the income from which those payments are normally met. Incomes can be disrupted – usually temporarily, but for an indeterminate period of time, nonetheless – for a number of reasons.

Chief amongst these are accidents or illnesses which leave the victim incapable of work. Fortunate employees might enjoy a company-based sick-pay scheme that provides at least a proportion of the normal working wage, but even this will be curtailed or stopped altogether after a given period of time. In the current economic climate, of course, another of the reasons for a sudden and unexpected loss of regular income is the redundancy notice and the months of unemployment that generally follow whilst the individual is looking for another job. For any of these reasons, the reduction in or loss of that normal income from work can well mean that it is no longer possible to maintain the loan repayments. As the debts mount up and still with no income to repay them, so might begin the inevitable slide towards personal insolvency.

Loan cover, of course, is designed not only to halt such a slide but prevent it from beginning in the first place. Backed by a simple and straight forward type of insurance, in the event of the policy holder becoming incapacitated for work or involuntarily unemployed, insured monthly benefits are paid out regularly until he or she has recovered sufficiently to resume normal working, has secured alternative employment, or for up to a typical maximum of 12 months, whichever comes first.

Loan cover can be arranged for relatively small loans or credit, or for significantly larger loans. Cover is bought in multiples of £100, so that the handful of pounds generally quoted is the price of the premium for covering each £100. In that way, it is generally possible to insure up to a typical maximum of £1,500 a month, or the equivalent of 50% of the policy holder’s normally earned gross income, whichever is the lesser amount. With up to £1,500 a month available in order to keep on top of the agreed loan repayments, most people would find such loan cover an invaluable weapon in helping to prevent the slide into personal insolvency.