Protect your finances with Payment Protection Insurance from Burgesses

In today’s fast-moving and changing world there’s no such thing as a job for life. When you’re in control and carefully manage each career move from one job to another, that’s not so much of a problem. The difficulties can hit you, however, when compulsory redundancy comes out of the blue and you’re suddenly out of a job. No work, no pay – fairly obviously – but where does the income come from to meet all your monthly outgoings? The very minimal amount of help you’d get from the State might offer a stop-gap consolation.

And if the chance of redundancy still seems unlikely, what about if you suffered an accident or long term sickness that left you unable to go to work for several weeks or even months? How would you cope financially?

It’s at times like this that payment protection insurance would offer the best protection against the financial fall out of you losing your income due to becoming unable to work.

Payment protection insurance (also known as PPI for short) offers a number of solutions that can help you financially should disaster strike. There are three main types of payment protection insurance – mortgage payment protection insurance (sometimes known as MPPI for short); loan payment protection insurance; and, income payment protection insurance.

Another name that you may also hear this type of cover called is accident, sickness unemployment insurance (also known as ASU). You can also get credit card payment protection insurance too.

Protecting your lifestyle with Payment Protection Insurance

With all these income protection UK policies, in the case of redundancy, or accident / sickness which leaves you unable to go to work, you will receive a monthly, tax free sum to help replace your lost income. So, if you have mortgage protection insurance, the money will help towards your mortgage repayments and any associated costs such as home insurance. It can literally save the roof over your head.

With loan payment protection insurance the income can help service your credit commitments, saving you from late and missed payments fees as well as keeping your credit report unblemished. Loan insurance saves you the worry of not being able to meet your monthly debt should you lose your income.

Credit card payment protection will be useful for you if you wish to protect the repayments on your credit card should you lose your income. Certainly, credit card protection insurance (or credit card insurance for short) can stop you being charged hefty fees if you miss a payment as well as excess interest. Credit card cover also means that your credit file will be maintained, as no payments will be missed.

Income protection insurance can be used to cover your lifestyle costs and general outgoings. Income insurance supplies you with a monthly sum that you are free to do whatever you wish with.

When you buy a payment protection plan, you decide from the outset the replacement income you will need in the event of your becoming involuntarily unemployed or unable to work due to accident or sickness. The monthly premiums you need to pay will then naturally be determined by the amount of cover you select. Of course, the amount will be subject to the payment insurance provider’s limits, but the income will go a long way to meet your financial requirements.

Another benefit of these income payment protection policies is that you can tailor the cover to meet your needs by choosing to have accident sickness insurance only; accident, sickness redundancy insurance; or simply, unemployment insurance.

What you choose depends on what existing arrangements you have in place already (if any). For example, you may have a good employer’s sick pay scheme that will give you full pay if you are off due to incapacity or illness, for up to six months’. In this case, you may decide that you will need just unemployment protection.

With the latter, it’s important to remember, of course, that to qualify for the unemployment cover benefits you have to become unemployed through no fault of your own. Redundancy insurance wouldn’t pay out if, for example, you’ve simply resigned from your present job or been dismissed because of your own misconduct at work. To cover redundancy, it has to be involuntary redundancy

So, we’ve had a brief look at the basics – let’s discuss some of the aspects in a bit more depth.

Mortgage insurance protection cover can’t stop you falling sick, having an accident or losing your job – but it can make sure that you don’t lose your home into the bargain.

You’ll know only too well that getting a mortgage is no easy achievement. You planned, you saved and you worked very hard to get that first step on the property ladder. In the uncertain economic times that seem to lie ahead, getting a mortgage is going to prove no easier, but owning your home will offer even more of a security against the ravages of a fluctuating equity market. In this kind of climate, mortgage protection insurance cover will prove to be an even more important ally now than ever before. So, why income mortgage protection?

At the risk of being alarmist, just a few well-researched statistics will also show why a mortgage payment protection insurance UK policy is such a valuable precaution. Research has revealed, for example, that over the entire course of the average mortgage, the majority of mortgage holders fall prey to at least one bout of sickness, or have to recuperate from accidental injury, for long enough to keep them off work for more than 3 months. Similar research has also revealed that a third of the population between the ages of 25 and 34 have experienced a period of unemployment lasting more than 30 days.

Why are these statistics relevant? They’re relevant because if you can’t go to work, or if you have no work to go to, then sooner or later you’ll probably be unable to keep up your mortgage repayments. And if you default on your mortgage repayments, then sooner or later, your mortgage lender is going to start repossession proceedings – and you stand to lose your home! In the current economic climate, mortgage lenders might seem jittery enough as it is. Default on your repayments and they are unlikely to be as patient or as tolerant in future as perhaps they once were. Currently, approximately 75 homeowners every day are finding their homes repossessed by such lenders and the majority of these repossessions follow a period of extended unemployment on the part of the mortgage holder. That is why a mortgage protection UK policy can help.

Although mortgage payment protection offers sensible and generally affordable protection, it’s not something you should rush into buying. Mortgage unemployment insurance will almost certainly be offered to you by your lender when you apply for a mortgage or seek to remortgage your home. Indeed, many lenders – household names along any high street amongst them – will exert quite considerable pressure in trying to persuade you to buy a mortgage payment insurance or mortgage protection policy from them. The unscrupulous ones might suggest that it is somehow a “requirement” to buy mortgage insurance when you secure the borrowing, and even the more honest lenders might suggest that your chances of securing the mortgage you want will be much enhanced by your taking out the mortgage cover with them.

This is the point at which you may wish to take a rain check. You are not obliged to buy a mortgage cover UK policy from the lender of your mortgage. Indeed, official research by the Office of Fair Trading has demonstrated that the insurance sold at “the point of sale” in this fashion is almost always far more expensive than comparable cover arranged on an entirely standalone basis by one of the reputable, specialist independent insurance providers. When you’re looking to buy your mortgage insurance cover, therefore, one of the first things to do is politely to decline the offer being made by your mortgage lender. Get a mortgage protection quote or mortgage insurance quote from independent providers instead – and you’ll find their prices are typically up to 40% cheaper than those on the high street.

Although many people consider that a few pounds for every £100 worth of covered required for the peace of mind that mortgage protection cover offers is good value, its quite startling that, currently, only about a quarter of all homeowners have yet taken the precaution of arranging suitable mortgage protection unemployment and / or sickness cover.

For those who may quite understandably be thoroughly confused by all the jargon and similar-sounding titles surrounding a mortgage protection insurance UK policy, generally, be aware that mortgage protection cover is not the same as mortgage indemnity insurance cover. The latter is a form of insurance which you might be asked to pay for by a mortgage lender concerned about the risks of your defaulting on the mortgage advanced to you. If you default, the insurance pays out to the lender the repayments you would otherwise have made. In other words, mortgage indemnity insurance benefits the mortgage lender alone – even though it’s you who will be paying the premiums!

Income protection insurance is different to income protection insurance cover. The former is a protection insurance policy that offers longer term cover (ie not the typical 12 – 24 months’ cover offered by the normal payment protection insurance plans) in the event of the policyholder being unable to work due to accident or sickness.

Income protection does not cover unemployment in any form, shape or size. Therefore, if you buy an income protection insurance policy, you may want to cover all your bases and take out a redundancy protection policy too.

Income payment protection insurance, on the other hand, offers short term cover for being unable to work due to illness or involuntary redundancy.

For the purposes of this article, we are discussing income payment protection insurance, even though there may be variations in the name of it.

Many people believe that should they become ill or are off work recovering from an accident that they will get full pay. This is not always the case.

Larger corporate employers sometimes run an in-house, group insurance scheme for the benefit of employees who are unable to come into work because they are on extended sick leave or have been involved in an accident. In a corporate income protection scheme, of course, your employer will be paying the insurance premiums on your behalf and the cover offered to you as part of your overall employment package.

Clearly, schemes will differ in terms of the benefits payable and if you are fortunate to be a member of such a scheme it makes sense to find out from your personnel department exactly what conditions apply and what proportion of your pay you would receive. With many of these schemes, you’ll find that the benefits increase (a larger proportion of your salary is protected) the longer you’ve been with the company. Nevertheless, there is likely to be a qualifying period before the benefits are paid – that is to say a minimum number of days you’d need to be incapacitated from working before you receive any payments. You’d also need to find out whether the benefits are then backdated to the first day you were unable to work, or whether the qualifying period is treated as an unpaid “excess”.

Payments under such company schemes will not be made indefinitely, of course, and so you’ll want to know for how long any benefits would be paid.

Traditionally, and in many departments still today, the best work-based income protection provisions are offered to civil servants. For many of them, their conditions of employment include sick-pay provisions that would be the envy of many people – namely, full pay for the first six months, followed by half-pay for the next six months.

In the fiercely competitive workplace, however, such generous terms as those offered to civil servants and some of those schemes offered by the larger companies are under constant pressure and review. You might take the view that such schemes are unlikely to continue for ever, or be in place when you most need the income protection.

Whether in the public or the private sector, however, the biggest drawback with any workplace income protection scheme is that although it might cover periods of sickness or other incapacity, it will almost certainly not cover you if you are made compulsorily redundant. Any redundancy, or severance, pay would be determined by your employer’s separate terms and conditions and will probably be based on the number of year’s service you have with that employer.

Therefore, it makes sense to full understand what scheme your employer offers (if any) and ensures that you are full protected for any financial shortfall with the right type of payment protection insurance.

Shop around for Payment Protection Insurance.

When looking for your income insurance protection unemployment policy, do shop around and get an income protection quote. This goes for all income insurance mortgage payment protection policies – by seeing what is on offer among the independent providers, you stand to get a low priced mortgage insurance quote, as well as for your loan protection and unemployment income protection insurance too. It is the only way you can ensure you get comprehensive cover at a low price.

As with all insurances, there are terms and conditions that you need be aware of, plus any exclusions:

Eligibility – are you, in fact, eligible for the claims benefits covered in the policy? Be careful of particular variations from policy to policy, but generally speaking, you’ll need to be of working age (i.e. between 18 and 65); actually working (i.e. not off sick) at the time the cover begins and have been in continuous employment for the previous six months; and be resident and working in the UK, Isle of Man or Channel Islands.

Deferred period – most payment protection insurance policies have an in-built “deferred period” at the beginning of the first period of cover, during which time it is not possible to make a claim. The duration could be as short a period as one month or it could be as long six months. Make sure you know how soon you would be able to claim under any protection insurance cover you’re thinking of buying.

Qualifying period – once the deferred period is completed, you should be able to claim whenever you’re incapacitated or unemployed for longer than a set minimum number of days. This minimum period of time of work is usually called a “qualifying period” and under some policies can be as short as 30 days. In others, it can be 60 days or even longer. Clearly the greatest benefit to you is the policy with the shortest qualifying period. Note, too, that some policies will treat the qualifying period rather like a policy excess, leaving you to make good your own losses during that period, before the claims benefits become payable, unless you buy a policy that backdates your cover to day on of your claim – look out for those as it means you won’t lose out financially.

Maximum claims payable – there will be a time limit on the number of months that your mortgage protection insurance will pay the mortgage for you. In the majority of cases, this is going to be a maximum period of either 12 or 24 months (you’ll pay more for the longer period, of course).

In summary, loan protection insurance and income insurance mortgage protection policies offer invaluable financial security to anyone who has monthly commitments they need to service, or simply worry how they would continue with their lifestyle should they succumb to accident, long term or become unemployed. Income insurance, redundancy cover, credit card protection, credit card cover and loan cover can all give this peace of mind.