A payment protection policy could protect you
- 24TH SEPTEMBER 2007
If you were to become out of work while having the commitment of repaying a loan, then without payment protection cover you could be left struggling to find the money each month to continue to meet your financial commitments.
However while a policy such as this can be a huge help, it isn’t suitable for everyone and this must be understood before you buy the product.
A payment protection policy - or ASU insurance as it is also known - is taken out to give you a fixed tax free income each month if you should find yourself out of work due to accident, long term sickness or unemployment. The cover would typically start to pay out after the 30th day of being out of work and would continue to provide you with an income for up to 12 months, although some providers do extend the cover to 24 months.
You can choose when getting quotes to take the cover out in case you should come out of work just for accident and sickness only; or just in incase you face unemployment only; or for accident, prolonged sickness and redundancy together. Where you look for your quote will also determine how much the cover will cost. If you take the payment protection policy cover that is usually offered from the high street lender you will often pay a higher premium than had you gone to a standalone provider such as British Insurance for your quote.
Simon Burgess, Managing Director, of the British Insurance, warns consumers to be aware of the cover being added onto the cost of the loan at the time the borrowing is taken. This, Simon warns, is just one of the ways which the high street lenders mis-sell payment protection in order to rake in huge profits. You don’t have to take the cover alongside your loan but can choose to purchase it independently and this is the best way to buy your payment protection policy safely and cheaply.
