Loan protection could be considered if you want protection against incapacity and redundancy. You could take out a policy to protect against both events and then claim the income you chose to insure when you took out the protection. This amount would have been agreed by the provider and is then paid back over a certain period of time once a deferment period has passed and would continue for the term of the cover if it were needed that long.

With some providers the deferment period is 30 days and with others you could be eligible to claim on the loan protection policy once the 60th day had passed. However with other providers it could be up to as long as 90 days before you would be eligible to make a claim on your protection. Just as when a claim could be made would differ so does how long the policy would continue to provide an income.

Some providers allow you to claim on your protection for 12 months should you need it while with others it might be 24 months of protection before the policy ceased. If you wanted a policy that paid over 24 months then you would have to pay out more in premiums than if you wanted loan payment protection that paid over 12 months. You also need to bear in mind that a wait of 90 days before claiming can be a long time as by then you could have suffered mortgage arrears of 3 months and have the lender sending out warning letter. Whichever you chose 12 or 24 months of protection the policy would cease if it reached the period of deferment.

While you might want to be able to make a claim for redundancy or incapacity you might just want to protect against one event. Therefore you could choose whether you wanted to take redundancy cover on its own or incapacity protection alone. The events chosen by you would go towards the cost of the premiums for a policy. Some providers might offer you carer cover in with your protection, however only the generous ones would. You therefore need to check the terms offered to find out. If you have carer cover you would be able to make a claim and receive the income you chose to cover if you had to give up working full time to take care of a family member who became incapacitated.

Loan protection can be a more viable option for protecting your loan repayments than risking claiming from the State for an income. If you should claim for money from them then any help you might get towards your repayments often nowhere near matches the income that you are used to bringing home when working. This could leave you with a struggle on your hands to find the money needed to service your loan which could still mean you falling behind on your repayments.

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