Payment Protection Insurance is something that retail borrowers find very useful because it helps them plan for the future better. Also known as loan payment insurance or even credit insurance, it is designed to ensure that the buyer’s debt is serviced even if he or she is unable to do so for any reason.
You might have taken out Payment Protection Insurance to protect your mortgaged house or any other asset just in case you are unable to earn money for some reason. However, are you certain that your insurance will give you the benefits you expect? There are a few things you need to know before you buy this insurance policy. They include:
1. The loan payments covered are usually only for a fixed period. This depends on various factors but it is rarely more than 12 months. While this is generally sufficient time for yo to make other arrangements to pay back the loan, a surprising number of people expect the loan to be serviced fully because they did not go through the details of their insurance policy to read this.
2. Most insurers will not pay out a claim if it comes to light that you were self-employed, retired or even a student at the time of taking out the loan.
3. Similarly, you would not be eligible for the insurance on account of a pre-existing medical condition such as diabetes, back pain or heart trouble.
4. If you get a payment from your company in lieu of notice then you might not be eligible for a claim on the insurance policy for that period.
As you can see, getting money from your Payment Protection Insurance policy is not always a straightforward issue. Therefore, you need to have a detailed discussion with the person who is selling the policy so that you have a clear understanding of what to expect. There have been many cases of people having been sold these policies even though they do not need it or even qualify for it. Further, many people are pressured into buying these policies by being told that they are compulsory.
A Payment Protection Insurance is extremely important as long as it has been taken out for the right reasons and with all the necessary information in hand. This insurance will certainly add to your monthly payments which might be considerable but it will also give you lots of peace of mind.