Have you considered loan payment protection? If you have then you should also consider who you are going to take your cover with. Taking it with the high street lender could mean that you pay way over the odds for the policy and if you choose to search and compare with the independent provider you can make huge savings on your cover. A policy is taken out by those who have the commitment of a loan with repayments to maintain to insure that if they become unemployed or incapacitated they would have an income towards servicing their repayments.
When taking out loan payment protection you can choose the amount of the repayment you make each month to your lender that you want to protect. This sum of money would be pre-agreed by the provider as all with set a limit to the amount you can protect. The agreed amount is then paid back to you monthly for up to the term if needed as tax free payments. You would generally have to wait for a period of between 30 and 90 days before seeing any money and your benefit could continue for either 12 months or 24. Once the term had been reached, providing you had to claim that long, the cover would cease.
Bear in mind that were you to have to wait up to 90 days before claiming then you could already be in arrears with your loan repayments by this time of 3 months. While lenders are lenient and will give you time to repay payment arrears you would still have broken the contract of your loan and therefore be at risk of being taken to court. If you have a secured loan then of course your home could be at risk by breaching the repayment terms of your loan. You would also have to weigh up the fact that you could have found work or recovered within a period of 12 months and a policy paying out over 24 months would cost more than one paying over 12 months. However the benefit would cease once it had reached its term regardless of whether you had found work or recovered and got back to work.
You have another choice to make when you apply for your policy and that is the events that you want to protect against. You could take an all in one policy that would protect against unemployment and incapacity together. However should you just want to insure your loan repayments against redundancy alone then you can or you could just take out cover for incapacity alone. Some providers will give you carer cover in your protection so if a loved one were to become incapacitated you would be able to make a claim on your payment protection and care for them.
With loan payment protection behind you there would be no need for you to make a claim to the State for an income to help you to continue servicing your repayments. State benefits might fall short of the income you are used to bringing home which could mean you would not have enough money to maintain your essential outgoings which of course would include your loan repayments. If you risked using savings you could also be let down as they could deplete before you had got back to work or have found work.
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