You are able to cover redundancy with mortgage, loan or income payment protection depending on your needs. All policies can be taken out independently with specialist providers and this is the cheapest way to get a quality product that you are able to fall back on if and when you where to lose your own income.
Income payment protection when taken out to cover redundancy would give you a sum of money that you insured at the time of taking the protection. All payment protection specialists would allow you to insure a certain amount of the income each month. This would affect the premium that you are asked to pay and your age would also be taken into account. This means the younger you are when you protect your income the cheaper the protection would be.
Income cover would allow you the luxury of having an income each month so that you would be able to search for work without having financial worries. You would be able to continue paying your mortgage at the end of the month and so not risk losing your home if you get into arrears that are no longer manageable. If you go into mortgage arrears you would have to make an agreement with the lender to pay off what you owe while also being able to pay your normal payments. As arrears were caused by being unable to pay there would be no chance of making such an agreement. Therefore the lender would have no option but to take you to court and this means repossession would be imminent.
Of course you would also have the money to pay all of your other outgoings which keep you home up and running and your family happy. This would also include having the funds to be able to maintain such as loan repayments or credit card bills when they came around.
You could also cover redundancy and your mortgage on its own with mortgage payment protection. Just insure the repayment you make each month, again up to a set amount and then use this to pay your mortgage lender and avoid arrears. Loan payments could also be kept in check with loan payment protection and this means your credit rating is kept intact. A bad credit rating leads to a refusal in the future by lenders when you want to take out another loan or any kind of credit.
It also takes a lot longer to repair a bad credit rating than it does to get one.
When you cover redundancy with payment protection you would have a deferment period before claiming. This can be between the 30th and 90th days of you being unemployed. Some payment protection providers will backdate the benefit to the first unemployment date before continuing to supply you with an income that would be tax free. All policies will payout for a pre determined period of time which is stated in the terms of the policy, this must be checked before you sign. Usually you are able to take out cover which lasts either for 12 monthly payments or 24 monthly payments before it ends.
Simon Burgess is Managing Director of the award-winning British Insurance (http://www.britishinsurance.com), a specialist provider of low cost income payment protection insurance (PPI), mortgage payment protection insurance (MPPI) and loan payment protection insurance.
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