A lot has been written about the health of the economy and the potential for job losses. If you’re seriously worried about the safety of your job then thoughts have probably turned to how you would meet your mortgage payments and other bills if your income was to dry up. If you find yourself in this position then there are ways to ward off the worry by taking out Payment Protection Insurance.
Public health warning
Payment Protection Insurance or PPI as its known has received a lot of criticism. This is largely due to Financial Service Authority investigations which have revealed widespread mis-selling of the product. This said if you know what you’re signing up for and are aware of the costs involved then it can be a helpful form of insurance should the worst happen.
Show me the money
PPI will make repayments or act as a substitute income if you find yourself in circumstances where you’re unable to make certain repayments or you lose your income, either because you’ve lost your job or you develop an illness which keeps you out of work. You can protect against all kind of repayments, everything from your credit card to your mortgage.
Meeting the mortgage
It’s been reported recently that applications for mortgage payment insurance have shot up of late while people are concerned about the rising cost of mortgages and their ability to meet repayments.
An average mortgage protection policy can pay out for 12 to 24 months depending on what you specify. Costs can vary dramatically but for a 12 month policy you’ll have to pay out around £60 if you want £1,000 a month to meet your payments. This isn’t cheap but if you think that you really need the policy then it could be worth it.
The third way
If you are going to take up a PPI offer then don’t just take the offer your card provider or mortgage lender suggests. In most case taking up a deal from a third party specialist insurer will save you a significant sum of money.
If you do decide to take out PPI then make sure that you’re eligible for the cover. There are exclusions around who providers will cover and it’s worth baring in mind that you may run into problems if you are self-employed.
A financial priority?
All forms of insurance involve a bit of a gamble but some like car insurance are a legal requirement while others such as PPI most certainly aren’t. If you are considering taking out a policy then should have a clear idea of whether you think there’s a reasonable chance of you actually making a claim. If you’re feel like your financial situation is very secure then your money might be better spent elsewhere.