Six reasons to consider this insurance
A Guide to Income Protection
Income Protection is a short-term insurance product available to help Brits who are displaced from work due to involuntary redundancy, illness, or accident. It offers 12 to 24 months of monthly benefits payments following a covered event – the period covered depends on the provider's own policy terms. Coverage eligibility begins 30 to 90 days after initial coverage. Commonly referred to as income payment protection, this short-term insurance product is part of a portfolio of three common types of payment protection insurance (PPI).
The name used to describe the income payment component of the payment insurance products is actually fairly important. Due to the synonymous names used for income payment protection and income protection, which are technically two different products, there is often confusion. Income payment protection is actually the more appropriate name for the payment protection income product. Income protection insurance is generally a long-term insurance product with higher premiums. It offers benefits that pay out up until retirement at times.
Income payment protection insurance cover is the simplest of the three payment insurances to understand, assuming the distinction from income protection insurance is clear. Income protection is designed to offer a monthly tax-free income support to the insured when job income is lost. The maximum allowed coverage for the insurance is usually a percentage of the insured person's normal monthly income. More and more, Brits are realising they most provide for their own short-term unemployment support because the State does not see this as its role. The State offers very little help in the short-term unemployment assistance process, leaving the responsibility to individual consumers by putting in to place strict criteria in order for homeowners to qualify for financial help.
Mortgage payment protection insurance (MPPI) is another of the three types of payment protection covers. It offers the same core benefits as income payment, but its purpose and uses are slightly different. Mortgage payment insurance is designed as a way for homeowners to secure their monthly mortgage obligations in the event of lost income. Since homes are the most valuable asset many people own, it helps them to cover their most important obligation. This payment cover allows for coverage of up to a percentage of their standard monthly income. Mortgage payment insurance has long been sold by banks and High Street lenders in combination with mortgage products. This has recently led to allegations of mis-selling.
Income Protection – Quote and Apply
Loan payment protection is the third type payment insurance. Again, it has much of the same premise as the other two covers, but it has a unique purpose and some extra benefits. Loan payment cover is intended as a way to secure a large percentage of monthly debt obligations. This important protection helps with credit rating maintenance and helps avoid repossession of secured debt. As with the mortgage insurance, loan payment cover is often combined with loan products.
The Citizen's Advice, a leading British consumer advocate group, recently filed a super complaint against the payment protection insurance industry. Much of the complaint was related to the packaging of products common amongst large institutional sellers. Packaging of loan, mortgage and Income Protection insurance products is not inherently bad, but it has led to some mis-selling activities. Some lenders pressure borrowers into believing they need the insurance to get their loan. Others have more unethically built the payment insurance premiums into their loan repayment costs without communicating this to borrowers. This helps hide the expensive premiums charged by many sellers. Consumers need to be careful to read fine print in loan disclosure documents.
As a result of the complaint, the Office of Fair Trading (OFT) and Financial Services Authority (FSA) conducted investigations of the payment insurance industry. The FSA imposed severe fines and sanctions on some banks and High Street lenders as a penalty to those it felt used mis-selling techniques. The OFT has appointed the Competition Commission to evaluate the business practices in the industry and is awaiting their report to take appropriate actions.
Income Protection – Apply Online
Much of the questionable practices with institutional income protection sellers have slowed simply because of the intense consumer scrutiny. Now, consumer advocates are working to urge consumers to watch for similar tactics being used by online lenders. The improved consumer awareness that has resulted from the publicity has brought to light the great insurance opportunities available through stand alone insurance brokers. Income protection insurance specialists often sell payment protection cover at premium rates that are 40 to 80 per cent less than prices offered by banks and lenders.
Independent income protection insurance brokers are often members of industry associations that maintain high ethical standards and codes of conduct for members. This reputation for more ethical business practices is a great relief to consumers. Many consumers are realising than can benefit from payment cover. This has changed the negative perception that the industry developed from mis-selling practices. Brokers specialise in insurance and customer service. They also maintain relationships with the bulk of the insurance provider network. This allows them to offer the best products and rates for virtually any customer and any product.
Income protection brokers are also convenient given their expansion through the internet. Consumers can visit a specialist web site and learn about protection. They can also fill out an easy questionnaire to get a great selection of customised protection product offers with low rates. Whether the payment insurance takes the form of income protection insurance, mortgage protection insurance, or loan protection insurance, the peace of mind and security afforded customers is a great value if premium costs are reasonable. Brits need to protect themselves and their families and payment insurance is generally the best short-term consumer protection available. Homes and families have been secured for many Brits who insured themselves against job loss.
