When it comes to keeping up with a wide variety of debts following the loss of a job through illness, accident or involuntary unemployment, the options may seem quite limited initially. A redundancy package can only stretch to a few week’s pay in some cases, while sick pay allowances vary dramatically from one company to another. Few people have the luxury of large savings accounts to fall back on, and state benefits rarely stretch to even the most basic kind of mortgage or credit card commitment. These limited options mean some people choose payment protection insurance as a method of providing a safety net in a crisis.
To clarify, payment protection, or payment protection insurance, also known simply as PPI, usually refers to a collection of insurance products which all do roughly the same thing. The main aim is to help people keep up with their debts in the event they are stripped of their income through no fault of their own. Insurers will pay out regular cash sums while the policyholder tries to get back on their feet. A typical policy will be relatively short-term and will pay out cash assistance for 12 to 24 months, depending on the individual company and policy.
Basic income protection insurance is a type of policy designed to provide a general sum each month towards a wide range of commitments. Normally the money can be used for just about anything from a credit card bill to the cost of the fuel or bus fare to get to a job interview. A specific variation is mortgage protection insurance, specifically designed to help someone keep up with their home loan, while loan protection is similar but covers other monthly debt obligations and can be used to cover a specific concern such as a car loan.
With a few exceptions, it is rare that the whole income or mortgage will be covered, and protection is normally guaranteed for a specific percentage such as 50, 60, or 70 per cent. The main aim is to help someone keep going while they try to get back into the same position they were in before they fell foul of an unfortunate event.
Payment protection insurance has attracted one or two negative headlines in recent years thanks to various authoritative bodies examining allegations that some companies were mis-selling policies to people who did not qualify for them. The resulting coverage has led to a greater awareness among members of the public, and has also seen some more independent insurance companies gain welcome interest.
One such firm is payment protection specialists British Insurance. Company Managing Director Simon Burgess said: “There are many ‘good guys’ in the sector who do not look to push policies on people who do not need them and who charge a fairer price than some high street companies. Shopping around these firms can achieve some surprisingly low quotes for products which provide detailed and reliable cover.”
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