Even people who have histories of good health can suddenly find things take a turn for the worse and end up with a long-term illness. Likewise, those who may feel their jobs are highly secure can get unwanted surprises during times of financial uncertainty. With more and more headlines speaking of recession, some consumers may be worried that the future is less rosy than many would have expected. This immediately calls into question how they would continue to keep up with their financial commitments if they lost their job through no fault of their own. A payment insurance policy can help out those who fall on hard times, and at its best can keep someone in their home.
Payment insurance will help protect people who fall ill and face a long period on the sidelines, and will also pay out to policyholders who are out of work through injury following an accident. It will also cover the likes of involuntary redundancy.
To qualify, a person will need to be a full UK resident and have held down a job for a set period, with most insurers asking that policyholders have been in work for six months. Some people will not get protection for medical conditions which were diagnosed before a policy was bought. So, say someone has been a long-term asthma sufferer, and has to take a long period of work because of the condition, they are unlikely to be covered for this.
Common versions of payment protection include policies which help out people with their mortgages, specific loans, and to physically replace a portion of their incomes. Mortgage protection will, as the name suggests, help someone keep up with their home loan repayments, loan protection is usually taken out for a specific debt like a credit card or car loan, and income protection will provide a lump sum which is a percentage of someone’s lost income.
Subject to a successful claim, the typical payment insurance policyholder will find their cover is quite simple. A cash amount will arrive in their bank account tax-free from their insurer. This will continue for each month they are without work or until the debt happens to be paid off, or the policy runs out - many will continue making payouts for up to two years.
Simon Burgess is managing director of protection specialists British Insurance. He said: “Payment insurance is a broad market and policies vary dramatically in value. More independent firms like ours may be able to give someone a highly competitive quote, and we pride ourselves on giving effective cover to our customers at a typical cost way below some big name high street companies.”
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