Some people may have heard of the phrase, but be unsure what it means or what it refers to. Others may be more familiar with the product concerned but could be a little confused about some of its associated jargon. Payment insurance, after a little research, is actually quite simple and straightforward and can provide a lifeline in times of a financial crisis. The sector tend tends to take on particular significance in times of financial uncertainty or economic slowdown.
Payment insurance, or payment protection insurance as it is also sometimes known, is designed to help a person out should they suddenly lose their income through no fault of their own. A typical example might be falling ill and facing a long recovery period, or suffering an accident and ending up on a long lay off. Policies also cover work-related eventualities like involuntary redundancy and payout tax-free cash supplements to people while they recover or seek new work.
The sector is quite broad but most policies under the term carry out similar jobs. All involve financial protection in exchange for a regular premium. Three common variations include mortgage payment protection, loan protection, and income payment protection cover. Mortgage protection is specifically tailored to help out with a home loan in the event of an unforeseen crisis. Income protection covers a specific slice of someone’s entire income, and loan protection can be taken out for one specific debt such as a particular credit card.
This range of options means there is a type of policy for just about anyone with a particular debt. Different insurers will have differing levels of flexibility and most can provide policies which only provide cover for involuntary redundancy or accident and sickness, depending on a person’s individual needs.
One of the most handy features about this type of cover is the ease with which cash payouts arrive in someone’s bank account following a successful claim. They are simply transferred into an account tax-free and will continue for one year to two years, depending on the provider concerned. However, they will not always cover 100 per cent of the commitment concerned. Depending on the type of product, they will provide a helping hand of around 50 per cent while the policyholder looks for alternative employment or concentrates on recovery.
Different companies have different ways of selling payment insurance policies to consumers. Some big banks have been known to offer cover at ‘point of sale’ when providing someone with a loan, credit card or mortgage. These tagged-on types of policy can sometimes be bad value, and a potential policyholder might be able to save money by turning to more independent standalone companies, such as the protection specialists British Insurance. A better deal can sometimes be found through such companies, which can offer cheaper policies by shunning some of the approaches to commission adopted by high street companies.
Related Posts