If you were to lose your income through being redundant then how would you continue to pay your outgoings each month? The same would apply to becoming sick or if you had an accident that meant you were unable to work. You would not know how long it would take you to find work again or when you would be able to return to your own job again. However your mortgage lender would expect you to pay your mortgage as you always have. The same would go for your other bills such as heating, lighting and the grocery bill. If you want something to rely on then you need to consider income insurance.
When you look into income insurance you will find that are two products of similar names, income payment protection and income protection insurance. While both pay out they do so in different ways. Income payment protection is the insurance that would allow you claim a sum of money, tax free, if you should become unemployed or suffer from an accident or illness.
Income protection insurance would payout if you were to suffer from an illness or accident that meant you were unable to work but it would not cover unemployment. This policy will pay out for a lot longer than income payment protection; in fact it would continue providing for you right up to retirement age.
Income payment protection on the other hand would provide an income for you between the 30th and 90th days of accident, sickness or unemployment. It would then continue giving you an income each month for between 12 and 24 months depending on the provider you take the policy with. Some providers will also backdate your cover to the first day of you being unemployed or of being made redundant. The cost of the policy would be reflected in how much you wanted to insure of your income and your age when taking on the cover.
By taking out income payment protection insurance and having this behind you there would be no worry of getting into arrears with your mortgage. Even if you get behind on your mortgage by just one missed payment then you would have to talk with your lender. They would want to know when you would be able to catch up on the arrears and of course at the same time keep repaying the payments. If you have not got the money then making an agreement would be impossible. With income payment protection behind you, there would be no problem and of course no worry of losing your home.
Income insurance taken from a standalone payment protection specialist is the cheapest way to take out your policy and they will provide you with all the information needed for you to ensure that a policy would be suitable. There are exclusions in all policies and they are dependent on the provider with some adding in more than others. However as long as you read the small print, then you would have a policy that you are able to fall back on if and when you needed it. |
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