Know your options with the payment protection plan
- 25TH JULY 2007
If an individual is looking to take out a payment protection plan then he or she should know their options before signing on the dotted line. The payment protection plan should cater for all individual needs but so often fails to live up to expectations because the consumer has not been fully informed about the payment protection plan before it was taken out.
There are two distinct types of payment protection plan – the monthly premium and the one off payment. Both have fundamental differences that the consumer should know about before he or she begins to shop around for adequate cover.
The monthly premium payment protection plan option is rare in the world of payment protection plans. Generally offered by standalone providers, such as independent payment protection specialist British Insurance, it charges a monthly premium based on the level of your debt and will cover all debts if so desired instead of covering a specific debt that it has been taken out in conjunction with.
The one off payment protection plan is generally taken out in conjunction with a loan or credit card and only tends to cover that specific debt. It is also added to the terms of a loan instead of kept separate, thus becoming subject to interest and charges, as the loan would also be. This form of payment protection plan is generally offered by high street banks and lenders.
Whilst it is definitely the consumer’s choice as to which payment protection plan to take out, there are distinct advantages of one over the other. As a result, every consumer should know this before taking out a payment protection plan to begin with.
