Income payment protection insurance is one of the more confusing products of all the payment protection cover you can take out. This is due to the fact that there is this policy and a similar policy called income protection insurance. Income protection insurance would pay out over the longer term which can be up to the age of retirement if needed but does not cover unemployment, just accident and sickness.

Income payment protection on the other hand would safeguard against the possibility of you being unable to work after sickness and accident and it would also payout if you were to become unemployed due to such as being made redundant. However it would not payout for as long as the other policy, in fact for a much shorter time. It would payout depending on the provider offering the policy which is usually for between 12 months and 24 months. You would also have to wait between 30 and 90 days before you are able to put in your claim and this again depends on the provider you choose to take your protection from. Some providers might also back date your policy to the first day of you being unable to work or of being unemployed. You also have to compare the exclusions which can apply to the policy as these are what determine if you would be eligible.

A policy taken with a provider who only sells payment protection policies is essential if you want to get the cheapest but best quality product. They will also provide you with all the advice that is needed to be sure cover is suitable on their website and in the key facts of the cover which you are comparing.

Income protection would allow you to be able to continue paying out for all your essential outgoings if you lost your own income. You could insure up to so much of your income each month and then get this sum back if and when you became unemployed or incapacitated. It would allow you the peace of mind that when your mortgage payment was due the money would be there in the bank. With this behind you there would be no chance of you falling into arrears and being unable to keep up with your mortgage repayments. You would be able to concentrate on making a recovery if you were ill or has suffered an accident or it would give you the time needed to search around for work again.

Your income payment protection insurance would also provide with enough money to be able to continue paying your loan or credit card outgoings so that you would not be at risk of getting into debt. This would allow maintaining your credit rating and keeping yourself out of court. You could also keep on paying all other essential outgoings which would be enough to be able to carry on living your lifestyle without having to make too many drastic changes. You would also not have to try to decide which bills could be juggled around and put off for a while which could get you in knots financially.

If you would like the luxury of having a replacement income if you should lose yours then you should consider protecting your income up to a certain amount each month with income protection insurance. This policy can be taken out in case you should fall sick and find yourself unable to work. It would also give you the safety of an income if you should have an accident that meant you had would not be able to earn your own income. A policy would also payout if you should become unemployed through reasons not of your own.

You would have to stand to so many days after becoming unemployed or incapacitated. The majority of standalone providers will make this somewhere between 30 and 90 days. Cover pays out for a certain length of time once it has begun, with some providers offering 12 months of payments and others offer 24 months. You have to check the small print to be sure of the terms of the cover you are considering and also to find out if the provider would backdate to the first day of you becoming incapacitated or of unemployment. The exclusions can also be found in the small print and should be compared against your circumstances.

Of course you must be living in the United Kingdom, the Isle of Man or the Channel Islands to be eligible to take out the protection and also be in full time employment. Other exclusions are added in by the provider and these are dependent on the provider with some adding in more than others.

Income protection insurance would allow you to be able to continue financing your mortgage repayments. It is essential to keep up with your mortgage repayments as if you cannot maintain them you would be looking at having your home repossessed. Another essential repayment is any loan or credit cards you may have.

If you do not maintain your loans then your lender could take you to court to reclaim what you owe through your possessions. At the very least, your credit rating would be affected and this could make borrowing in the future very hard. Naturally you also have many other outgoings to keep up with each month and your protection policy would allow you to maintain them as if you were earning.

The cost of protecting your income differs even with independent providers. With this in mind it is in your best interests to get several quotes before choosing a policy. The premium charged each month will be based on how much of your income you want to protect each month. All lenders will allow you to insure up to a certain amount and this can be found in the terms and conditions of the policy. This information should be made available on the company website so that you can check and compare before buying.

You should not get this type of insurance for your income and a similar product, income protection insurance confused. Income protection insurance would not protect against being made redundant, it would however payout for accident and sickness and for a longer period of time which can be anything up to the age of redundancy.

Income protection insurance should not be confused with a product of a very similar name, income payment protection insurance. While the two are similar names and they would provide an income if you lost your own, the terms and conditions under which they do are very different.

Income payment protection insurance would provide an income if you were to fall ill or suffer an accident which meant you were unable to work. It would also payout if you become unemployed this could be by redundancy. You would have to stand to so many days of unemployment or of being incapacitated and then the policy would begin to provide you with the income you insured against. Usually providers ask you wait around 30 to 90 days. The policy would payout for between 12 and 24 months and then it would cease whether you had gone back to work or found another job. The premium you would pay would be based on your age and the amount you wished to protect each month. Your lifestyle is not taken into account with this type of protection.

Income protection insurance would supply you with an income but you would have to wait considerably longer for the payout to commence. You are able to protect against incapacity due to suffering an accident or an illness but unemployment by such as redundancy is not covered. While you would have to wait a certain period before putting in a claim once you had started to receive the benefit it would continue to payout for as long as you needed it. If necessary it would continue providing you with an income until you reached the age of retirement. There are many factors which go towards determining the cost of the insurance. Age will be taken into account and such as your gender; occupation and health will also determine how much you have to pay for the premium. Therefore if you are in the older age group, smoke and have an occupation deemed to be risky you will pay a higher premium.

Protecting your income is essential, when you sit down and work out what you have going out each month it will add up to a large amount. If you have the commitment of a mortgage each month then you have to ensure that you have the income so that you can continue meeting the repayments. If you fall into arrears with the payments then you will risk everything and you lender could choose to repossess. Even one missed repayment means you have broken the contract you signed with the lender for your mortgage. If you cannot show how you would you could catch up on the arrears while paying your mortgage then your lender will take the first steps of repossession.

Of course you will probably have other commitments that you need to keep on top of too; loan or credit card repayments for instance need to be maintained. If they are not then the lender could take you to court and at the very least your credit file will be affected. If you take out income protection insurance you are able to relax and concentrate on making a recovery and getting back to earning.

There are two types of policy to protect your income. One is income protection insurance and the other is income payment protection. Both are different despite similarities so you have to make sure that you are taking out the right one for your circumstances before going ahead and signing up for the policy.

Income protection would supply you with a replacement income if you were to suffer an illness or an accident that meant you could not work. The policy would payout a replacement so that you were able to keep up with all your essential outgoings each month. It would begin after the time stated in the terms and conditions of the policy which can be some considerable time. However it would provide you with an income once it had started to payout for anywhere up to the age of retirement if you were unable to return to work.

Income payment protection would also provide you with an income to replace your lost one but it would also payout if you should become unemployed due to such as being made redundant. It would also provide you with your income much sooner than income protection insurance would. The majority of providers state in their terms and conditions somewhere between days 30 and 90. However it would not payout until retirement age. Policies usually provide you with your income for between 12 months and 24 month, again this is set out by the individual provider.

You would have to check the terms and conditions of policies as each provider offers different terms and also different exclusions. Some providers will add in only a few exclusions while others could put in a great deal more. These have to be compared against your circumstances so that you would know whether a policy would be suitable before you take it on.

Income payment protection insurance is often offered when you take out a loan or credit card with the high street lender. This has been a cause for concern after the 2005 investigation which revealed that several well known high street names had mis-sold policies to those who could not hope to claim against the policy. This included individuals who were retired or who were not in full time work. Policies are also known to be very expensive and in some cases added into the borrowing and then have interest added in on top. This of course boosts up which was once a cheap loan considerably.

Income protection insurance and loan payment protection are both valuable forms of protection in their own right, but it is essential to be able to distinguish between them. The best way of gaining the information needed and to take out the policy is with a standalone payment protection specialist. In some cases you are able to make savings of up to 80% on your loan payment protection policy with an independent payment protection specialist. Always check over the terms thoroughly before signing up for your policy and you will have something to fall back on which would allow you to be able to maintain all your repayments.

There are various insurances to protect your income and you need to know what cover your employment would give you so that you can protect against any shortfall should the need arise. Below we explain what plans there are at what they do.

Mortgage Payment Protection insurance will pay your mortgage if you are made redundant, fall ill or are injured, for one year, sometimes two. Of the 11.7 million current mortgages just 2.3 million are protected by this insurance and seven out of ten of those cost more then 5 pounds per month per 100 pounds of cover and are sold by the lender – if bought independently than can be more competitively priced. A spokesman from mortgage brokers London & Country said, “This is often regarded as expensive cover and the take up is low.”

Payment Protection Insurance (PPI)

Payment Protection insurance is normally specific to a credit agreement, credit card or personal loan mostly with benefits going straight to who is providing the service and therefore, payments should not have any affect on any social security benefits. You are protected if you are made redundant, are injured or too ill to work. This cover usually costs approximately 18 pounds per month for every 100 pounds of monthly cover. For a monthly repayment of 300 pounds the cost of the premium is 54 pounds a month.

If you feel you need this security then it is worth having but you do not have to take it from the lender as it will be expensive, even adding thousands onto your loan. Companies have been mis-selling PPI but Alliance and Leicester have been caught out and fined 7 million for doing it. If you want PPI an independent provider will be more competitive; try britishinsurance.com or paymentcare.co.uk

Short Term Income Protection

Short Term Income Protection is different to the above two. It is paid directly to you and is linked to your income. This means it covers everything, from major outgoings (mortgage) to the gas bill but, it could affect any social security entitlement. Again, it pays out if you are made redundant, you are injured or ill and unable to work and the cover you get is calculated on 75 per cent of your net income or 40 – 60 per cent of your gross income. Some providers cap their monthly pay out at 1,000 pounds but others will pay up to 2,500 per month.

Unemployment Cover

Unemployment cover will pay between 40 and 60 per cent of a gross income in the case of redundancy and can be available as a free-standing policy. Social security payments can be affected again as it would be paid directly to the recipient. If your employer offers good benefits if you are injured or sick it may be worth having this stand-alone policy but it can cost more than a policy that covers for illness and injury too.

Full Income Protection

Full Income Protection can give you a policy that will include unemployment and the cover for injury or sickness is also more comprehensive and generally pays out for longer too. Nevertheless, the unemployment cover is as restricted as it is with any other policy and will only pay out for a maximum of 2 years.