Loan protection could help you by providing you with the income needed for you to be able to maintain your repayments in the event that you became a victim to unemployment or incapacity. You could take out a policy to protect against both events or you might just want to take a policy that would pay out for incapacity alone or for redundancy on its own. You could search around and compare for the cheapest premiums with a standalone provider and at the same time compare the terms offered by the provider.
The amount of tax free income that you would be eligible to claim on your loan protection policy would be the percentage of your repayment that you chose to protect. This would have to be agreed with the provider when applying as it also determines how much you would have to pay in premiums for the policy. Your income might be paid back once you have suffered from one of the events covered for just 30 days and with other providers it could be up to as long as day 90 of unemployment or incapacity. Some could date back your benefit to the first day that you suffered one of the events so always check with the provider at the time of taking out your protection. When checking the terms you could also check to find out if your provider would include carer cover in your policy. If so you would be eligible to make your claim on your policy in the event that one of your family members should become incapacitated.
As you are taking out a policy to ensure that you would have an income to meet your repayments you should give thought as to how you would manage if a claim could not be made until the 90th day of falling foul of one of the events you had insured against. By the time you saw any money from your policy you could have fallen behind on your repayments by 3 months already and this could be causing a great deal of anxiety. You might therefore want to ensure that you choose a provider that would pay out your income from 30 days and who date back your benefit to the first day. Also remember that if you were taking out cover that paid out for up to 24 months you would have to pay more in premiums.
Always check the small print of any loan protection you are considering for exclusions as there will be some in all policies. These have to be checked against your lifestyle so that you would be sure of being eligible to claim your income.
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