Income payment protection insurance is a way to protect your finances against you losing your income due to accident, sickness or involuntary unemployment. Should this happen to you, the policy will pay out a tax free cash sum every month for up to 12-24 months, leaving you free to focus on getting better or finding a new job.

Benefit eligibility usually kicks in from 30 to 90 days following unemployment or illness, with some insurers back dating the claim to the first day of unemployment or incapacity.

Income payment protection is part of the payment protection insurance (PPI) family. The product itself is fairly easy to understand. It is intended to provide monthly income support to help sustain the insured. Maximum coverage typically allows for payment of up to 50 per cent of the insured’s normal monthly job income, though this varies among the different providers.

Consumer awareness of the benefits of payment protection insurance is on the rise thanks to many factors. Among the primary reasons for increased awareness has been negative publicity tied to mis-selling practices. Citizen’s Advice, a leading consumer advocate group, submitted a super complaint to the Office of Fair Trading (OFT) in 2005, alleging several specific unethical selling practices used by payment insurance sellers.

Regarding packaging of products, the group noted that many lenders were pressuring customers into buying the insurance. More unscrupulously, some would bundle the insurance premiums into the loan repayment to hide the expensive costs. Some sellers have even sold the payment protections to ineligible part time employees and retired people. These people would pay for premiums but could never receive payouts.

As a result of the allegations, the OFT and Financial Services Authority (FSA) both conducted investigations of the payment insurance industry. The FSA used fines and sanctions to penalize sellers it felt were engaged in inappropriate selling activities. The OFT appointed the Competition Commission to further explore the industry for consideration of regulations or other techniques to improve the consumer experience and already positive changes have been made.

This means that consumers now have more awareness of what to look for when buying their insurance as well as where from. Certainly while they have been exposed to the dark side of the income payment insurance industry, they have also become much more knowledgeable about the products and industry itself.

Consumers are now more cautious when approaching lenders who have backed off a bit from pushy tactics. They are also more aware of the great payment cover insurance options available through independent insurance specialists such as the ethical BritishInsurance.

Simon Burgess from the company says: “The high profile that the PPI industry has seen over recent years, which has not always been positive, means that consumers now have more awareness and choice when buying their cover. Bought properly, income payment protection insurance can replace a lost income at a difficult time, meaning people will not fall further in to debt or suffer financially if they are made redundant or become too ill to work”.

With the economy going through a meltdown and the words ‘credit crunch’ on everyone’s lips, it seems like financially, everything is doom and gloom and we should be prepared to accept anything that life throws at us, such as redundancy or incapacity that forces us to be off work (and without an income) for some time. However, this need not be the case. With an income payment protection insurance policy, you would still receive an income in these circumstances.

It sounds to too good be true, doesn’t it? But income payment insurance really can help you financially should you be made involuntarily redundant or become too ill to work. This innovative policy provides a tax free monthly sum that will help you through the bad times and allow you to maintain your outgoings will looking for alternative work or recovering.

The money you get from the income payment protection insurance can be used for whatever purpose you wish, from maintaining rent or mortgage repayments to paying for fuel and food or even clothing.

Waiting periods

So, how does the income payment protection insurance policy work? Well, in the event that you lose your income due to one of the aforementioned reasons, you can make a claim on your cover. The insurance does come with a waiting period before the benefits will start to be paid out and typically this will be anything between day 30 and 90 after the event (ie you are made redundant or are unable to work due to accident or sickness).

However, there are some income payment protection insurance companies who will back date your claim to the first day, so look out for these policies.

Once your policy has started to pay out, it will continue to provide an income until you get back to work or for up to the period defined by the provider, whichever happens sooner. Some policies run for 12 months whereas you can get twenty four month plans but they will obviously work out more expensive.

How much will it cost?

Income payment protection insurance can be offered by the high street lender at the time of taking out some form of borrowing such as loan, mortgage or credit card. You may hear it also referred to as mortgage payment protection, loan payment protection, credit card protection or ASU insurance (the latter stands for accident sickness and unemployment insurance, but they all do more or less the same thing.

Purchasing your cover this way can often be the dearest option and a far more effective way to get income payment cover is by choosing to shop around for the policy. By going with a standalone provider such as British Insurance, you can get cover from just a few pounds every month for every £100 worth of protection needed, making it an affordable way to protect your finances.

Income payment protection insurance can provide a financial lifeline and in a world where nothing can be classed as certain, this is essential.

Loan payment protection is one of three common types of payment protection insurance (PPI). Payment protection insurance products are a portfolio of short-term insurance covers designed to assist displaced workers who rely on monthly income to meet their financial needs.

All of the payment protections are short-term in nature. They offer tax free cash benefits paid monthly over the 12 to 24 month period of the plans, depending on the individual provider’s policy terms and features.

The loan payment protection benefits will typically kick in 30 to 90 days after the covered event happens, following initiation of protection. Some policies offer the added advantage of back paying your claim to the first day of incapacity or unemployment, so do look out for this when shopping around for your cover.

Levels of cover

You can choose the level of cover you need based on your what your employer offers in terms of sick pay schemes and typical redundancy packages, so you only pay for what you need.

The three typical events eligible for benefits are involuntary redundancy, or illness / accident. Customers can buy protection against either redundancy or incapacity or all three. That is why the insurance can also be known as ASU insurance (accident, sickness and unemployment).

Loan payment coverage is designed to help those not able to work or who have been made unemployed to carry on meeting their monthly debt obligations. With revolving debt, including credit cards on the rise, most us of rely on a steady income to meet our monthly demands. Loan payment protection insurance usually provides benefits of up to 75 per cent of income, or 1,500 pounds, whichever is less.

Savings of 80%

The loan payment plans are often sold in combination with consumer loans but this is often not the most cost effective way to buy this invaluable protection. By going with a standalone provider, such as independent protection specialists British Insurance, you can make quite substantial savings on your cover. With British Insurance, this is up to 80% compared with a policy bought on the High Street.

With this lower cost premium capability there is no reason why loan holders should not do what is necessary to protect themselves and their families against the financial fallout of unemployment. Prolonged health, injury, and involuntary redundancy are all stressful on their own. A lack of financial security can be even more overwhelming to Brits already burdened by one of these circumstances. The investment in a loan payment protection insurance premium is an investment in security and peace of mind for the insured and families.

So, is mortgage payment protection insurance really as bad as the media makes out it is?

Mortgage payment protection insurance (MPPI) is usually offered by the high street lender at the time of taking out the borrowing, but, historically, taking protection this way if often the dearest option, with some £5 billion being raked in each year in profits from selling mortgage cover alongside borrowing.

Since the payment protection insurance mis-selling scandal came to light, where it was highlighted how many consumers had unwittingly bought protection insurance that was not suitable for them, or which they were ineligible to claim on, some improvements have been seen within the industry.

Many firms are making positive changes to the way that they sell payment protection insurance products such as loan cover and mortgage payment protection. The Financial Services Authority (FSA) have said that they will do everything in their power to improve the way protection insurance is sold.

The sector was referred for an in depth review to the Competition Commission and their final findings should be released in early 2009. However, they have already said they will ban policies being sold at the same time as taking out a loan, which allows consumers to fully investigate all their options and shop around for mortgage insurance that is right for them.

An independent provider can often offer cover at a cheaper price, often with added policy benefits. By going with a standalone provider such as the ethical British Insurance, for your mortgage payment protection, you can save around 40% on the cost, compared to those on the high street.

So, is it for you? While none of us like to be pessimistic, the truth is, none of us are infallible and at any moment in time, we could become unable to work and be without an income and that is why mortgage payment protection can be so valuable.
MPPI should seriously be considered as a financial safety net. With repossessions on the increase (the Daily Mail 21.11.08 reported that 130 families are losing their homes every day) and more first time buyers taking on huge mortgages, protecting the borrowing is essential.

It does not have to cost a lot as the premium charged for cover would typically be based on the level of cover needed, your age and how much your mortgage repayments are each month. With standalone providers can cost from just a few pounds a month for every hundred pounds’ worth of cover required.

Mortgage payment protection needs serious consideration. Homeowners’ relying on State benefits will be disappointed. And while your own personal savings could help over the short term, however, if you remained unemployed or ill they could soon be depleted.

How can you tell whether the mortgage payment protection insurance UK cover that you have is the right policy for you? Does it offer the protection you need? And is it at a realistic price?

But first of all, what does this invaluable protection actually do for you? The mortgage payment protection insurance UK insurance can take away the worry of how you will meet your mortgage repayments the event that you become unable to work due to injury, prolonged sickness or involuntary redundancy.

Also known as MPPI, this cover will give you a tax free cash sum every month to help towards you maintaining mortgage repayments should you lose your income due to redundancy, or because of recovering from an accident or illness that prevent you from working.

Tax free benefits

Each month the mortgage payment protection insurance UK cover would give you a tax free payment which would then continue for between 12 to 24 months, subject to the policy terms and conditions of the provider. This would normally be after a 30, 60 or 90 day waiting period after you are out of work before you can make a claim, so do check the small print of any insurance policy you are considering.

When choosing your cover, do also look out for mortgage payment protection insurance UK providers who will back pay your claim to the first day of unemployment or incapacity as this means you realise the full benefit of the cover and will not lose out.

How can it help you?

Mortgage payment protection insurance UK policies can help you keep the roof over your head. If you were to get behind on your mortgage repayments by even just a couple of months, the lender could start to seek repossession of your home. By investing in an MPPI policy, you can stop your home being seized. Certainly, with the credit crunch hitting us all hard, it makes sense to protect our income and our homes in whatever way we can. That is why mortgage cover can make sense.

The cost

You may feel that with finances being tight already, having a policy is something you can ill afford. However, with standalone providers, mortgage insurance can cost from just a few pounds a month for every hundred pounds’ worth of protection needed, making it a viable consideration for any homeowner.

How your premium will be calculated would typically be based on the level of cover needed, your age and how much your mortgage repayments are each month. Cover could be cheaper if you chose to only protect against incapacity only, or redundancy only. This could be an option for you depending on the type of severance packages and sick pay schemes that your employer operates, so do check this out.

That way you can ensure that you get the mortgage payment protection insurance UK policy that best suits your needs and at a price that suits your budget.

MPPI – or mortgage payment protection insurance to give it its correct title) can provide a financial safety net at a time when you need it most. Should you become unexpectedly and involuntarily redundant, or have to take time off work due to incapacity (eg accident or illness), then this payment protection insurance cover can step in and help meet your mortgage repayments by paying out a monthly sum.

The MPPI cover can start to provide a tax free income from between day 30 and 90 after you have continually being unemployed or incapacitated, subject to the insurer’s policy terms and conditions.

The insurance will then continue to provide you with a monthly cash sum for between 12 and 24 months, again, depending on the terms laid out by the individual mortgage insurance policy as how the long the benefits will pay out will depend on the individual provider.

Some MPPI insurers will also back pay their policies to the first day of you being unfit for work or of becoming unemployed. This means that you don’t lose out financially, so do look out for this additional benefit when choosing your cover.

As you can see, this invaluable insurance really can take away the stress and worry of how you will you cope financially should you lose your income.

Considerations

As with all insurances, the terms and conditions of the MPPI policy will vary among the different providers so it is essential that you fully understand the cover you are buying.

Mortgage payment protection insurance should be considered as a financial cushion in the event that the unexpected happens. With repossessions soaring and more first time buyers taking on huge mortgages, protecting your borrowing is essential. Do you really want to become another repossession statistic?

Can I afford it?

You may feel that you have enough saved to cover your mortgage repayments for several months’ should you become unable to work. But the sad fact is that your savings could soon be eaten up in mortgage repayments as well as other essential outgoings. With MPPI cover you would have a monthly income to help meet your costs. And it need not be expensive. When bought independently from a standalone provider, it can be extremely cost-effective.

The premiums for mortgage insurance can start from as little as a few pounds a month for every £100 worth of cover required if you buy from an independent, specialist provider such as British Insurance.

Certainly, individuals who rely on State support if they lose their income could be at risk of losing the roof over their heads. While some help towards the interest part of the mortgage can be available, you do have to qualify and currently having more than £8,000 in the bank or a working partner could mean you lose out. The insurance can take over where the State fails.

Finally, do note that some mortgage lenders will try to pressurise you into taking out MPPI alongside your home loan. If this happens, make sure you find out how much extra the cover will cost each month and then get on the internet and shop around. Most homeowners will find savings of up to 40%

With redundancies a very real threat to us all in the current economic downturn, knowing that you would still be able to meet your mortgage repayments in the event of being made involuntarily unemployed or even unable to work due to accident or illness, would give great peace of mind. And you can get that peace of mind by taking out a mortgage payment protection insurance policy.

Also known as MPPI for short; mortgage cover; accident sickness and unemployment insurance; or mortgage payment insurance among many others, this invaluable insurance does what it says on the tin. Mortgage insurance protects your mortgage payments by providing you with a monthly cash sum that is tax free, in the event of you becoming unemployed or incapacitated.

How much cover will I get?

Mortgage payment protection insurance policy features and benefits differ among the various providers but you can expect to typically receive up to 75% of your gross income or £3,000, whichever is the lower amount. In most cases this should be enough to help meet your monthly home loan commitments as well as any associated costs (which are also covered) such as life and critical illness insurance; home insurance etc.

When can I claim?

Once you are made involuntarily unemployed or you become unable to work due to incapacity, you can make a claim for benefits usually from day 30 – day 90 after the covered event happens. This again will vary. Some insurers will back date your claim to the very first days of unemployment, so do look out for this additional benefit.

How long will the benefits run for?

A typical mortgage payment protection insurance policy will provide the benefits for 12 to 24 months subject to the individual provider’s policy terms and conditions. Either way, while receiving these cash benefits, you will have the breathing space needed to look for alternative employment or start to recover.

Things to note

As with all things financial, there are some things that you should take note of when buying this cover. These include checking the policy for any exclusions which would render the cover useless; knowing fully what the cover entails; and, shopping around for the cover.

Many homeowners will but their mortgage payment insurance at the same time as taking out their home loan. However, it can be more financially beneficial to shop around among the standalone providers.

One such provider, the ethical British Insurance, offer mortgage payment protection insurance that can cost up to 40% less than the mainstream providers, making it an affordable way to get yourself adequately covered.

Payment protection insurance (PPI) is a generic term that is used to describe loan payment protection insurance; mortgage payment protection insurance (MPPI); and income payment protection insurance. All three of these protection policies can be taken out for a premium each month and will help safeguard against the financial ramifications of becoming unable to work due to recovering from an injury or prolonged sickness that sees a loss of income; or, unemployment via redundancy.

All types of PPI policies will give the policyholder a monthly income that is tax-free and which can be used to service specific debts (such as a loan or mortgage) or general day to day costs (in this case, income payment protection could be ideal). There is a waiting period before a claim can be made and that is usually between 30 and 90 days after becoming unemployed or unfit for work.

Some payment cover providers will back pay the insurance claim to the very first day of becoming unemployed or unfit for work, so look out for this feature when choosing your cover. Once you have started to receive the policy benefits, it would then continue to provide financial security and peace of mind for between 12 and 24 months. Obviously, if you get back to work within this period, then the benefits will stop paying out.

The cost of the PPI cover will typically be based on how old you are at the time of applying for the insurance as well as what level of protection you want (eg accident and sickness only; unemployment cover only; or all three). However, this can vary greatly depending on where you buy the insurance. The cheapest quotes are typically given with a specialist standalone provider of payment protection such as British Insurance. At the other end of the scale, historically, the high street banks and lenders will usually offer the dearest quotes.

So is PPI a consideration for you? Consider how much your outgoings are every month and ask yourself what would happen if you were to lose your income. How would you manage to carry on staying financially afloat? Payment protection insurance could be the solution, providing an income to replace your lost one, up to a certain amount. You would still be able to continue paying essential bills without financial worry and stress.

A payment protection plan can be purchased in order to protect your financial future against the unexpected. It is safe to say that no one knows what is around the corner and involuntary redundancy or incapacity can strike at any time, leaving you vulnerable and struggling to cope financially.

This invaluable protection can be taken out to safeguard against the financial distress caused by becoming unable to work due to accident; sickness and redundancy.

A payment protection plan is actually an umbrella term, a generic name for three types of insurance - mortgage payment protection; loan payment protection; and, income payment protection insurance. All three policies work by paying out a fixed, tax free monthly amount which is decided by how much you want to cover.

When can you start to claim this benefit?

You can start to claim the benefit after a waiting period. There will generally be a period of waiting which is usually between 30 and 90 days after the event. Some policies can be back dated to the first day of the claim, so that you don’t lose out.

How long can you receive the benefit for?

This will vary among providers but usually the cover will run for between 12 and 24 months. Or when you get back to work – whichever is sooner.

How much does it cost?

The cost of the payment protection insurance will vary depending on where you choose to purchase the cover. While payment protection insurance is habitually offered alongside the loan at the time of taking out some form of borrowing, this can often be the most expensive option for your payment protection needs.

Despite what your lender may say, the cover does not have to be taken at the same time. You do have the option of being able to independently shop around for the protection. And by shopping with a specialist in payment protection such as the independent and award-winning British Insurance, you are more often than not able to make quite substantial savings while at the same time buying a quality product.

As with all financial documents, the policy features and benefits of all payment protection plans must be read to ensure you understand what you are signing up for. That way you can ensure you get the right level of cover for your needs.

When looking to purchase payment insurance, the most important thing to remember is that you are free to shop around for the cover and you do not have to buy it from the high street provider when you take out some form of borrowing such as credit card, loan or mortgage.

Certainly, the price of payment insurance policies does differ depending on where you choose to get the quotes for your cover. Historically, the high street lenders will ask that you pay more for the protection than the standalone providers. In some cases the difference can be substantial, so shopping around in order to see what deals offer a low cost solution is essential.

If you want quality payment insurance, then do your homework. Shop around among the independent providers such as British Insurance and compare not only premiums, but the policy features and benefits too. That way you can ensure you get the protection you need at a price that suits your budget.

By going with a independent provider such as the ethical British Insurance, for your payment insurance, you can make savings of around 40% on the cost of mortgage payment protection insurance and up to 80% on loan and income payment protection insurance compared to those policies on the high street.

So, what can payment protection insurance do for you? At any time, you could find yourself unable to work due to long term illness; injury; or, involuntary unemployment. And this is why payment insurance can help keep your finances in control, by providing a tax free amount, every month that will help replace your lost earnings.

Payment insurance will typically start to provide you with a tax free income every month once you had been out of work for between 31 and 90 days and will typically run for 12 to 24 months, depending on the policy provider’s terms and conditions.

It can provide a financial safety net should disaster strike, but there is no need to pay more for the cover than you need to. Finally, before you buy your payment insurance, check with your employer that there is not an in-house scheme that may already provide part of this protection - be sure that you’re not duplicating coverage you may already have.