If you cannot work because of an accident, illness or unemployment through no fault of your own, there are a number of ways insurance can help you protect your monthly income, credit or loan payments for a fixed period of time.
Ther are different types of protection insurance to cover you if you have to stop working due to an accident. unemployment or a serious illness.
A guide covering all aspects protection insurance is available from AdviserBook.
Payment Protection Insurance (or PPI) will pay out a regular amount to cover your payments (or a percentage of your payments) until you are able to cover them yourself. Different PPI policies cover different repayments you may have to make – such as mortgage repayments and loan or credit card payments. For information on PPI follow this link.
Mortgage Payment Protection Insurance (or (MPPI) specifically covers monthly mortgage repayments – the usual set period these payments will be covered for is 12 months – after this period expires you will have to cover your own payments. For information on paying your mortgage if a difficulty arises – follow this link.
Similarly loan protection insurance will usually cover your payments for either 12 or 24 months.
Credit card cover is usually paid on a percentage system – the insurance company will pay either a percentage of your outstanding balance, or the minimum monthly payment. It is important to remember that the insurance company will usually only cover what you owe from when you make a claim, anything in excess of this will be your responsibility.
PPI can often include life insurance, click the link for further information.
For a guide to PPI follow this link and follow this link on how to choose a policy.
Income Protection Insurance (or Income PI) works in a similar way to PPI, paying a regular amount in the event of illness or disability, except that Income PI will directly pay you the equivalent of what you would earn (excluding tax) if you were able to work.
Advice on helping you decide if you need income protection insurance is available from Citizens advice
Whilst other types of insurance have an agreed excess, income PI has a waiting period system – the longer you agree to wait after you claim before you start receiving payments, the lower your premiums will be. So before you decide you must know how much your employer will provide if you are taken ill.
It is a legal requirement for your employer to provide “statutory sick pay” for up to 28 weeks – this amount will usually be less than you would earn if working normally, but can help you cover expenses whilst ill and you can use it to help lower premiums in your income PI. Many employers arrange income protection insurance for their employees, make sure you check this before applying for you own. Like PPI you will often be un-entitled if you are self-employed.
Your monthly premium is decided by your age, your sex, your current health, what your job entails, what your lifestyle choices are, and how long a waiting period you are willing to agree to.
Income Protection Insurance can be a very complicated process and full details, including how to decide on whether you need insurance, what to look for and how to choose the right policy, are available at the following links:
Critical Illness Insurance provides you with a lump sum of money if you are diagnosed with certain illnesses or disabilities.
The kinds of illnesses that are covered are usually long-term and very serious conditions such as a heart attack or stroke, loss of arms or legs, or diseases like cancer, multiple sclerosis or Parkinson’s disease.
The policy may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation.
Full details of Critical Illness Insurance are available from MoneyHelper::
Furher information is available at the following links:
Private Medical Insurance (PMI) is a policy designed to cover the cost of private health treatment and medical expenses incurred during acute illness or injury outside that provided by the NHS.
Follow this link to see The Association of British Insurers pages on PMI.
Similar policies are also available to cover Private Dental treatment.
Follow this link to see MoneyHelper’s pages on Dental Insurance.
You can compare quotes at the following links:
Limitations
As with all insurance, policies have exclusions and limitations – before buying you should be aware that most policies will not pay out for the first few months after you buy your insurance. To claim on unexpected redundancy most policies will specify that you must have been previously employed for 12 months at that company, equally most will not cover you if you are self-employed. You may also have your claim rejected if you make a claim based on a pre-existing medical condition – make sure you know which illnesses are covered by the policy.
Make sure that you carefully go through the policy, or, if you are unsure on any point, ask the salesperson to explain it to you.
Make sure you understand exactly what you are buying before you buy it out. However, if you decide to cancel the policy after taking it out you will have a 30-day “cooling off period” in which you can make a cancelation and receive a full refund on the money paid in.
Companies often offer PPI when you take your mortgage loan or credit card from, however you do not have to buy it from them and they must notify you if PPI is part of the package they are supplying to you.
Payment Protection Mis-Selling
The mis-selling of Payment protection insurance (PPI) was all over the news for a while but except in a very few specific circumstances, the deadline to put in a mis-selling claim was on 31 August 2019.
If you require advice and help settling a complaint about the company who provided you with PPI, follow this link to the Financial Ombudsman Service, or click here for their Frequently Asked Questions page.
Alternatively, follow this link for an explanation of finanacial mis-sellingaand what you can do about it.
Complain about your insurance service
Guides to making a complaint about your insurance services are available at the following links:
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