Loan cover can be taken out independently and this is usually one of the best ways to take out the cover as you can save a great deal of money when compared to taking out the cover with the lender on the high street. The policy is taken out so that if you were to suffer incapacity or redundancy you would have an income coming into the home that would be tax free and which could be put towards your repayments.
This income would be the sum of money that you chose to protect when taking out the loan cover and which your provider pre-agreed to. You might be eligible to make a claim on your policy after the 30th day of your unemployment or incapacity or with some providers there could be a deferment period of as long as 90 days. The latter can be a long time to wait as you could fall behind on your repayments during the 3 month period that you have to stand. You could continue claiming this income for as long as 12 months should you remain unemployed or incapacitated however some providers might offer a policy that would last for up to the 24th month if it was needed. You do pay more for a policy paying out over this time so check with the provider when you apply for your cover.
Always check with your provider to find out what exclusions there are in the policy. There will always be at least some but some providers could add in more than others. These have to be checked against your lifestyle so that you would know you are eligible to claim on the policy. You do have to be working in a full time position at the time of applying for the policy and you would have to have been working for a period of time when applying, this could be around 6 months. You would also need to live in the UK, Channel Isles or the Isle of Man in order to make a claim on the insurance.
You could also choose what events you needed to cover with your loan cover. You could protect against both or you might just want to insure against the possibility of a lost income due to redundancy. You could alternatively just choose to take out a policy that would cover incapacity alone. Of course there is also the option of protection against both events and have the peace of mind of being able to make a claim if you were to suffer from either of the events. Also check with the provider to find out if you could claim on your policy in the event that you would have to stop working full time to remain at home and look after a close family member. Carer cover is included with the more generous providers so always check with yours.
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