PPI is otherwise sold as payment protection insurance. A policy can be taken out in the form of loan, mortgage or income cover each covering what the name of the policy would suggest. You can take a policy with an independent provider which can lead to the cheapest policy or you can take cover with one of the lenders on the high street and possibly pay over the odds.
The cost of premiums would differ with providers and are based on several factors. One of the things taken into account is the amount that you choose to protect of your mortgage, loan repayment or monthly income. This amount would have to be pre-agreed by the provider you choose because all will set a limit as to how much you can protect up to. Your chosen amount is the sum of money that you get back if you have to make a claim due to one of the events and it would be tax free each month for the term. You could be eligible to make a claim on the policy once you have been unemployed or incapacitated for up to 30 days. However you could also have to wait to make a claim until the 90th day. Your provider could give you an income each month for up to 12 months if you were to have to claim for this length of time or some offer 24 months of cover. However you would have to pay out more in premiums for your policy if it continued for 24 months.
You can take PPI to protect against the possibility that you could become a victim of redundancy or incapacity in one policy. If this is the case then you would be able to make a claim should you suffer from either of these events. You could alternatively take out protection just to give you an income if you become unable to work or if it suited your lifestyle better just take cover for redundancy alone. Carer cover could also be included, however not all providers include this so you would have to check the small print. Carer cover allows you to be the carer for a loved one if they became incapacitated. What events you take protection for would go towards how much you would have to pay in premiums for the policy.
Mortgage payment protection would cover a percentage of your monthly mortgage repayment which would go towards you keeping up with the repayments and out of mortgage arrears. This is essential as any amount of arrears would be a huge worry as if you are unable to repay them the lender could take you to court and you could lose your home.
Loan insurance as your payment protection would protect your loan repayments which could keep you out of court if you should fall into debt. Income protection as your PPI policy would provide an income towards any essential outgoings.