Within the payment protection insurance (PPI) industry, there is much similar and overlap between the three common types of coverage. Loan protection, mortgage protection, and income protection payment covers are all somewhat similar in terms of the benefits they provide. However, there are some definite advantages available from loan protection insurance that are unique compared to the other umbrella payment protection covers. Perhaps its strongest comparative advantage is that plans usually allow coverage up to 75 per cent of normal income, or 1500 pounds, which ever is lower. Mortgage protection and income payment plan covers are usually a bit lower.
Other advantages include that loan protection insurance typically includes a death benefit to make the coverage a bit broader. PPI products provide protection to covered people in the event of involuntary redundancy, illness, or accident. Long-term health plans generally make no mention of unemployment. The State also does not provide any or enough assistance for unemployment. Loan protection is intended to help covered people meet monthly debt demands and up to 25 per cent of other expenses. This is great financial security for Brits in a time of financial need.
Loan protection insurance also usually provides hospitalisation benefits and carer benefits. Home and auto debt, as well as personal loan and credit card debt can be overwhelming for employed people. Imagine the stress related to trying to meet monthly demands when unexpected unemployment occurs. Unfortunately, many people do not have adequate protection. Given that housing and mortgage markets are already headed for struggle in the coming years, it is especially important that people do what it takes to protect themselves from covered events.
Payouts for loan cover are monthly, for 12 to 24 months, depending on the plan, and begin from 30 to 90 days following the covered event. Again, the insurance is intended to provide short-term protection. It is a not designed to be a long-term solution. Insurance brokers are great resources in helping consumers find covers for both their long-term and short-term needs. Brokers have product knowledge and customer-friendly attitudes that are great features of their plans.
Consumers need to be cautious about approaching large banks and lenders for payment protection or loans. Premiums through these types of providers are usually at least twice as much as those offered by independent brokers. Additionally, these large institutions lack some of the people and product focuses that make brokers preferable. Consumer groups have spoken about deceptive practices and mis-selling techniques commonly used by high street banks and lenders. Consumers are much better off exploring protection options through a more reputable stand alone broker.
Loan protection insurance can prevent loss of home or car, or bankruptcy for covered individuals. Premiums through brokers are very affordable and there are some common discounts that can give them event greater value. Consumers need to protect themselves against major loss, and with just a few pounds in premiums each month, they can. Terms and conditions of coverage vary by product. This is why brokers come in handy.
| Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of loan protection insurance. |
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