Loan protection insurance cover can be a great financial relief to Brits already faced with recovery from illness, or accident. The loan coverage is part of a broader umbrella of payment protection insurances that are known as payment protection insurance (PPI). Other common types include mortgage payment protection insurance (MPPI) and income payment protection. Benefits are fairly similar for all types of payment protection products, but loan coverage offers payouts up to 75 per cent of monthly income, which is higher than the other types. It also includes a death benefit, which typically is not available through income payment protection.
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Payment protection is sometimes confused with income protection as the terms are commonly overlapped. The difference is that income protection is designed to be a long-term insurance, with payouts potentially lasting through retirement, if necessary. Loan protection insurance cover, on the contrary, is designed to offer short-term loan and income protection for prolonged illness, involuntary redundancy, or accident. Monthly payment periods typically run from 12 to 24 months with coverage available to pay monthly debt expenses and up to 25 per cent of other expenses. There are maximum payouts based on plans and normal income amounts of the individual covered.
While there are brief exclusionary periods following the start of coverage, many insurance brokers specialize in helping consumers find low cost premium products that have great benefits and minimal exclusions. The principle behind loan protection insurance cover is that it provides financial security, for the short-term, to help meet the needs of full time employees who lose their jobs. In spite of some mis-selling tactics employed by high street banks and large lenders, the insurance does not covered part time employees or retired people.
Loan protection is also important as some Brits do not qualify from income support from disability. The loan payment protection may be the only monthly security a customer has to rely on in the event of unemployment. It is as much of a security and peace of mind product, as it is a financial benefit.
Consumers must be cautious when looking to banks and lenders for mortgages, credit cards, and loans. While an ongoing investing by the Financial Services Authority (FSA) has slowed questionable practices used by some large institutions to sell the insurance, many still attempt to manipulate or deceive customers. Lenders sometimes package payment protection insurance products with loans and pressure customers into adding the insurance into their portfolios. Others barely make mention of the insurance premium other than in the fine print of loan disclosure materials.
Brits need to look out for their own short-term needs. The State provides little to no monthly support. Insurance brokers are a great resource for low cost loan protection insurance cover. Their rates are often half of what high street banks and lenders offer. They also specialize in their insurance products, so their knowledge of the industry and their attention to detail with customers is superior. Ultimately, the less stress there is on the consumer to buy the insurance, the more advantageous it is to have.
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