Just as you would protect your life and car by taking out insurance against the unexpected then you should also give some serious consideration to protecting your mortgage, loan and credit card repayments along with your income in case you should find yourself unemployed.
In a world where the unexpected frequently happens if you have a mortgage or loan and make repayments each month thought should be given as to where you would find the money to carry on repaying them if you were to lose your income. If you have mortgage repayments then you need to ensure you can repay them each month otherwise you are risking repossession of your home. Mortgage payment protection insurance (MPPI) taken out as unemployment cover can give you an income to replace your lost one. If its loan or credit card repayments you have to make then loan payment cover would do the same to make sure you had the money to repay them each month and not get behind and into debt. If you want to insure your income then income protection would allow you to insure your income up to a certain amount each month and this would allow you to continue living your lifestyle by paying your essential outgoings.
All protection insurance policies tend to work on the same principle in that you have to be out of work for a pre-determined amount of time before it will start paying out. Usually this can be anywhere between the 31st and 90th day of being continually out of work and would then continue providing you with an income for between 12 and 24 months depending on the provider.
Just as all policies have a waiting period before you can claim they all have exclusions within them that could mean unemployment insurance isn’t the right product for your circumstances. Some of the most common reasons which stop people from being eligible to claim include only being in part time employment, suffering from an ongoing illness when taking out the cover, being retired or self-employed. While these are all common there can be others depending on the provider, so it is essential to check out the small print of any policy you are considering buying.
Taking out the cover with a standalone specialist provider is the best option as opposed to taking it out alongside the loan or mortgage. Policies sold with the high street lender and alongside loans and mortgage are what has earned the product a bad name and which have been associated with mis-selling.
If you want to avoid the high premiums and poor selling techniques which were a focus of investigations into the sector recently by the Financial Services Authority and currently, the Competition Commission, then stick with someone who specialises in payment protection products for your policy. It was the high street lenders who received fines by the Financial Services Authority during the investigation not the specialists and it is important to remember that it isn’t the product that is at fault but the firms who have little or no experience in selling unemployment insurance.
By: Simon Lance Burgess
Sometimes accident sickness unemployment insurance is termed ASU insurance. As the name would suggest it would protect against becoming unable to work after suffering an illness or accident and protect against unemployment by such as being made redundant.
There are different policies for different types of situations. Mortgage protection would cover the repayments of the mortgage. Loan protection would be able to protect any loan and credit card repayments you had to make. Income payment protection would allow you to continue paying your essential outgoings each month.
All policies would have the same basic rules. You pay a premium each month decided by your age and the amount you wish to protect each month. In the case of mortgage payment protection you can also choose whether just to cover against unemployment only or incapacity only to keep down the cost. Age based policies means that the younger generation can take now afford to protect their borrowings each month.
There are certain exclusions to be found in the small print of all payment protection cover. These have to be checked if you are to be certain that you would be able to claim on the cover. Once you have then you can check to see when the cover would begin and end. Payment protection usually starts to provide an income between the 30th and 90th day and would continue between 12 and 24 months. Some providers will also backdate to the first day of you being unable to work or of being unemployed.
Accident sickness unemployment insurance is essential if you have a mortgage to keep up with. By failing to maintain the repayments of the mortgage you are breaking the contract you signed and as such the lender can choose to repossess your home. While they do not do this if at all possible, not being able to agree with the lender on how you would catch up on what you owe, while at the same time missing more of your mortgage repayments means the lender will repossess. If you were to get behind on loan repayments and into debt then you could get a County Court Judgement against you and at the very least your credit rating would be affected and you would still have to make an agreement to repay the loan.
When you take out the loan or mortgage with the lender they will try to get you to take out accident sickness unemployment insurance. They charge way over the odds for the protection and bring in around
One of the first tips when looking to take out unemployment income protection insurance is to not confuse this product with one of a similar name. Income payment protection and income protection insurance are two separate products.
Income payment protection pays in the short term and cover unemployment along with accident and sickness. Income protection insurance would just cover accident and sickness, not unemployment and it pays out over the longer term which could be up to the age of retirement. So when looking for protection for your income against unemployment then it is income payment protection that you need to buy.
Another tip that will save you a great deal of money is to buy your policy from an independent payment protection specialist. High street lender usually offer policies but they charge huge premiums which boosts up the loan or mortgage considerably.
You do have to know what is included in unemployment income protection as all providers will add in exclusions. These have to be checked against your circumstances so that you know you would be eligible to claim against the policy. Once you have then you can look at when the cover would begin to provide you with an income and when it would end as this differs with providers. Usually cover would start somewhere between days 30 and 90 of unemployment and some providers backdate the policy to the first day of unemployment. You would then be able to relax and concentrate on finding work while replying on the policy for between 12 months and 24 months.
Unemployment income protection insurance is taken to ensure that you would have something to rely on if you lost your own income. The income it provided you with would be the sum that you insured when applying for the policy and it would be tax-free. You would be able to use the money to pay a wide range of outgoings that needed keeping up with each month. One of the most important of these outgoings would be your mortgage payment. Your policy would provide you with peace of mind that you are not going to get into arrears. Getting into mortgage arrears and not being able to catch up means that the lender will repossess your home through the courts and a judge will set an eviction date.
You could also see yourself appearing in court if you cannot keep up with loan and credit card repayments. If you get behind on these then you would at the least earn yourself a bad credit rating. This could make getting any kind of credit very hard in the future as all lenders take your credit file into account. Depending on the amount you owe your lender could take you court to claim what you owe through possessions and this means a judge will send bailiffs to your home.
Unemployment income protection insurance can put a stop to all of this and much more. It would allow you to be able to continue meeting all essential bills that go out each month and which keep your home running. It would also mean that you would be able to continue living your current lifestyle and not have to make many changes.
By: Simon Lance Burgess