The importance of getting a payment protection insurance quote

Anyone who works will have the worry that their job could suddenly be snatched away from them, leaving them without an income. Similarly, how many of us worry that one day we could have an accident or a prolonged illness that prevents us from working? While these are worrying thoughts, the good news is that you can help get peace of mind that you will not struggle financially so much should disaster strike, by getting a payment protection insurance.

So what is payment protection insurance?

In a nutshell, payment protection insurance (or PPI) provides a replacement income when yours is lost through no fault of your own. This income comes in the form of monthly tax free payments that will help you financially up to the chosen benefit and benefit period should you be made involuntarily redundant or become incapacitated.

Three types of cover

When getting your payment protection insurance quote, you can choose to have either debt specific cover in the form of loan payment protection insurance and mortgage payment protection insurance (MPPI). Or you can choose to benefit from a general income that you can use as you wish each month, under an income payment protection insurance policy.

Where can I buy a policy?

You could have the protection added into the loan or mortgage at the time of borrowing. In the past this may have been done by providing you with a single premium policy where the single premium was added to the loan or mortgage. That would usually have resulted in interest charges also being added to the insurance premium.  Although this practice is now not allowed any more,  the premium may not always be the most competitive.

Alternatively, you can choose to shop around for cover – you do not have to buy it from your mortgage or loan lender - and get a payment protection insurance quote from the standalone providers, which can often lead to the biggest savings. If you choose a standalone provider for cover you pay a monthly premium and as long as you continued to make these payments, you would be protected. This provides you with more control over your policy, which you could also easily cancel if you managed to pay off the loan or mortgage earlier than you anticipated.

How do I take out cover?

When getting your payment protection insurance quote it is very important that you check out the policy terms and features, as these can vary among the providers. Typically, the amount you insure will be up to the limit specified by the provider and this amount will usually be around £1,500 a month or 50% of your gross monthly income, whichever amount is the lesser. The income is paid back tax free for the term of the protection once you have waited for the deferment period to pass. Providers will usually offer protection that pays out from between the 30th and 90th day of your redundancy or incapacity and would continue providing benefit for either 12 or 24 months depending on the provider’s terms.

Getting a payment protection insurance quote means you are one step to closer to protecting your finances should the unexpected happen as well as having real peace of mind that you would still be financially okay.

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