There are two main things to be aware of when you are taking out cover protection against an unexpected loss of income. This article aims to explain the basics of cover protection, and to help you to make the most informed choice about the right type of policy for your needs.
Cover protection has many names, although it is most commonly known as payment protection insurance (or PPI). You might also see it called ASU insurance, or Accident, Sickness or Unemployment insurance, because these are the main reasons why someone would lose their income unexpectedly and need to protect their financial outgoings.
The first important point to note about cover protection is that you are not legally required to buy it. The only time that it might be a requirement is if your mortgage lender insists on you having cover protection before they will agree to lend to you. It is understandable that they might want you to have insurance against an unexpected loss of income, especially with the current redundancy rates as they are, especially given the amount of money that they would lose if you were to start defaulting on your monthly mortgage repayments. However, although it is not a legal requirement, being unable to meet your repayments could eventually result in repossession so there are strong arguments for having cover protection if you have a large home loan.
The second point to note is that in the event that you do wish to take out cover protection, you do not need to buy it at the time you take out your loan or credit card (known as 'point of sale'). You can choose which provider to buy your cover protection from, and you are almost guaranteed a better deal if you shop around as opposed to taking the first one that is offered to you - after all, if you have no other option at the time, why would they bother to make that product competitive?
Of course, if you are taking out cover protection for your mortgage repayments and need to have cover sorted out before your application can be accepted, you just need to be a little bit more organised and shop around before you finalise your application. There are plenty of providers out there though, so a small bit of research is all that is needed. Click here to get a cover protection quote from a specialist.
There are a variety of types of cover protection available to suit your financial circumstances. If you have taken out a personal loan, you can choose just to cover these repayments. Likewise if you have a mortgage and only wish to protect yourself and your family should you suddenly lose your income. If you want to have the peace of mind of knowing that all your bills are going to be covered in the event of illness, injury or redundancy, income protection could be the right type of cover for you.
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