Payment protection does just want the name suggests, it protects your repayments and provides a replacement income if you were to lose your own. You could choose between loan, mortgage and income cover based on what you have to pay out each month. Once you have chosen the most suitable form of protection you would then decide on the sum you wanted to protect which would become your tax free income. However there would be a limit so the provider would need to agree to the amount you choose.
A claim could be made on your chosen form of payment protection insurance (PPI) after you had been redundant or incapacitated for a certain period of time. This could be after just 30 days or with some it might be after 60 or 90 days have passed. Some providers might offer to date back your benefit to day one of you suffering one of the events but you do have to check within the terms to find out. Your provider could offer you benefit over 12 monthly payments if you did have to claim for that length of time or it could be as long as 24 monthly payments. However if the term should be reached and you were still unemployed or incapacitated the policy would simply cease regardless. Should you have protection that paid for up to 24 months you would need to pay more in monthly premiums than with a policy supplying an income over 12 months?
You might want the security of redundancy and incapacity and claim if you suffered either of these events or you could choose what event you wanted to protect against. Incapacity protection can be taken if you are confident that you would have enough income to maintain your outgoings or repayments while looking for work if made redundant. You could choose to take out redundancy cover alone if you have a good sick pay plan in place. Your provider might also give you the added security of being eligible to claim your income from your chosen policy if you needed to give up working full time to stay at home and take care of a loved one that became incapacitated. However, only the most generous of providers will offer this so you do need to check before you take out your cover.
Finally be aware of the exclusions which can be found in all forms of payment protection. There will be at least the most frequently found ones and some providers will add in more than others. These would have to be weighed up against your lifestyle to ensure that you would be eligible to make a claim. You would almost certainly have to be in full time work in order to make a claim and have been in work full time for a period of no less than 6 months when you apply to take out cover.
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