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 Burgess is Managing
Director of the award-winning British Insurance, a specialist
provider of unemployment
insurance, loan protection insurance and income protection
insurance.
