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Payment Protection and Redundancy: Time to review your cover

It can be difficult to pick between the different types of payment protection for your mortgage. The differences are often small but significant and which one is most suitable for you depends on what you need the payments to cover.

Mortgage payment protection insurance. This is often offered along with your mortgage. It typically starts to pay your mortgage repayments sometime after your earnings from employment stop and continues to pay out for up to 12 months. You can usually decide how long after you are made redundant the insurance policy takes effect.

Payment protection insurance. Sometimes called Accident, Sickness and Unemployment cover. You might have taken out this insurance with a personal loan or credit card. It helps you to keep up your loan repayments by paying out a set amount for a fixed period. Again, payments will start sometime after you cease working.

Short-term income protection insurance. This insurance replaces a proportion of your income for a fixed time, rather than being tied to a specific loan or mortgage. This should not be confused with other income protection policies, which usually will not pay out if you lose your job.

People will often consider protecting their income, or repayments when redundancies are threatened or rumoured in their company. If redundancies at your company have already been announced, or even if there have been rumours of job losses then it may be difficult to make a claim. If you take voluntary redundancy the insurer won’t normally pay out either. When looking at a policy you will need to be clear about your circumstances or you may find yourself committed to a policy that is not appropriate. If you work part-time, you are self-employed or you’re on a temporary contract check carefully as many payment protection policies will not cover you.

With the economic outlook variable at best protecting your mortgage payments is certainly worth considering, especially if you have any doubts about the longevity of your employment.  Even if you have a policy it is worth looking at your prospects of getting a new job before activating your insurance. Everybody has different requirements from an insurance policy so as always, I am happy to review your specific circumstances please get in touch if you need advice.

Payment protection insurance is optional.  There are other providers of Payment Protection Insurance and other products designed to protect you against the loss of income.  For impartial information about insurance, please visit the website at


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