Have You Considered a Payment Protection Plan?

By Simon Lance Burgess

You do need to give some thought to how you would be able to keep up with your payments each month if you could not work. These payments could include your mortgage, loan, credit card and bills that allow you to live your life comfortably from month to month. Without having something to rely on if you lost your own income unemployment or accident or sickness would be made even more stressful. A payment protection plan would allow you to be able to keep up with your essential bills and not have to give thought to where you would find the much needed money each month.

There are different types of payment protection plan that can be taken out. They all depend on what kind of payments you have to make each month. Income cover gives the most protection as it allows you to insure up to so much of your own income. Mortgage payment protection would cover the repayment of your mortgage and loan payment protection would do the same for loan and credit card outgoings. They all work in the same way in that they pay out for so long and then expire and there is a deferment period before the policy could be claimed against.

Providers would normally offer a policy that would pay for either a 12 or 24 month period of time. Some will backdate your benefit to day one of unemployment or of being incapacitated. Usually you would have to wait somewhere in the region of 30 to 90 days before the policy would begin paying out. A policy is a safety net and usually the period of time it provides is more than long enough for you to have found suitable work or to have made a recovery from your illness and have gone back to work well before it runs out.

You do need to have some sort of protection in place if you are to ensure that you can keep the roof over your head. Your mortgage lender will not throw you out on the street immediately but if you cannot maintain your repayments and get into arrears while not being able to show you have an income it is quite likely that they will take you to court as a last resort. It is not worth losing everything you have built up over the years when you can pay a small premium each month and be able to carry on maintain your mortgage with the policy.

The same would apply to missed loan/credit card repayments although this would affect you in other ways such as gaining a County Court Judgment or having bailiffs take your possession so the lender can get back what you owe. You would of course at the same time destroy your credit rating and this could make borrowing extremely hard in the future. A bad credit file can take many years to put right and during this time you could have to pay over the odds for interest rates even if you are able to get credit. A payment protection plan can take all these worried away.

Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of payment protection plan.