There was a time when having a job meant long-term financial security – whatever the sector you worked in. But with the UK having suffered its worst recession since records began in 1955 and predictions from the Bank of England that it will be years before the economy gets back onto its feet, it’s vital to put a financial contingency plan in place should the worst happen and you lose your income.

Very few people have the luxury of savings to fall back on, and if you do, why should they be depleted when they’re no doubt earmarked for something else? Savings should not have to be used to maintain your lifestyle in the event of unemployment, but what’s the alternative?

This is where unemployment, accident and sickness insurance, often also called payment protection insurance, may help.

Payment protection insurance is a broad classification of a group of insurance products that provide similar benefits. There are three common types of payment protection. They are income payment protection insurance, mortgage payment protection insurance, and loan payment protection insurance. Again, the benefits of these products are virtually the same, as are the covers. Each offer relatively short-term assistance for workers (typically 12 months and sometimes 24 months) unable to work because of involuntary redundancy, accident, or illness. Our policies offer 12 months benefit.

Although the basic aspects of the payment protection products are the same, there are some differences in purpose and features of each.

Income protection insurance is intended to be a monthly income supplement to help replace a sizable portion of lost job income or where the policyholder is unable to work due to incapacity. You select how much you need to receive each month to meet your financial commitments if your salary goes (subject to policy limits) and you are advised of the standard monthly premium before you apply.

British Insurance payment protection insurance lets you choose between unemployment cover only, accident & sickness cover only, or both unemployment and accident & sickness cover. If you are unfortunate enough for that event to happen to you, then income payment protection insurance will put a set amount into your bank account every month for up to a year, allowing you to meet whatever bills you need to pay.

You need to think carefully if you could rely on state benefits and employment benefits or if redundancy protection could give you piece of mind. It is also good to check what would happen if you got ill for a long period, to decide if unemployment and accident & sickness cover is appropriate for you.

Mortgage protection insurance is very similar to income payment cover, but it does have a slightly different purpose. Mortgage protection is intended to help assist the insured through coverage of the monthly mortgage obligation only, rather than cover other outgoings as well. For most people, their mortgage is the most important financial obligation because their homes are secured by it. Failure to meet mortgage repayment guidelines can result in repossession. Many properties have been saved by the assistance provided by mortgage insurance. Mortgage protection insurance is routinely sold in combination by banks and lenders, but this packaging of loans and insurance has come under fire in recent years.

Loan protection insurance is the third of the common payment protection insurance products. It is very close in nature to mortgage protection, but again, its purpose is somewhat unique. Loan protection is typically there to help cover full monthly debt obligations. Loan insurance is intended to cover monthly debt plus often includes a provision for an income supplement to help with some basic monthly expenses. As with the mortgage protection, loan protection is regularly sold in combination with loans by banks and lenders.

The process of packaging loans with payment protection has long been the practice of many banks and High Street lenders. In recent years, this process has drawn the ire of consumer advocate groups who have questioned some of the selling practices to the point of claiming that some amounted to mis-selling. There was also much comment that this practice gave lenders and banks an unfair advantage with borrowers failing to shop around. The Competition Commission has now issued a report with a list of suggestions to separate the insurance sale from the loan or mortgage offer. Those recommendations are not yet in force and industry discussions continue. You don’t need to wait for that. If you have a loan or mortgage, it is worth checking if you pay a monthly fee for loan payment protection insurance or mortgage payment protection insurance. You may be able to save money by switching to a standalone provider, such as British Insurance.

But the same counts for payment protection insurance as any other insurance: When you check premiums, make sure you do so on a like for like basis, as eligibility criteria vary and the cheapest redundancy cover policies may only start paying after you have been unemployed for 3 months. British Insurance can provide a back to day one benefit when you are eligible to claim.