Payment Protection Insurance Guide

What Is Payment Protection Insurance?

Payment Protection Insurance repays the balance of any debt under the plan in the event that the insured becomes ill, injured, unemployed, or dies. This type of insurance is broken down into 3 main parts (and typically separate policies must be purchased for each part), Credit Life Insurance, Unemployment Income Insurance, and Credit Disability Insurance. If the insured person dies before the loan term is finished the Credit Life Insurance policy will pay the remainder of the loan; while the Credit Disability Insurance policy will pay up to a specified amount of the loan if the insured becomes disabled and the Unemployment Income Insurance will pay out a cash benefit if the insured becomes unemployed.

The Payment Protection Insurance protects almost all kinds of personal debt, such as mortgages, personal loans, and credit cards. You can get this insurance when you apply for a loan as part of the contract.

Should You Get a Payment Protection Insurance Policy?

This form of insurance will protect your credit score and rating by making sure that your loan and credit card bills get paid on time if you are ill, disabled, or unemployed and can not work. Most companies pay up to 12 months on a claim they have accepted, though up to 24 months can be obtained in certain situations. This is a tremendous financial relief to your family. Also the Payment Protection Insurance Policy has a 30 day obligation free trial, should you decide that this policy is not for you within that time frame you will receive any premiums you have paid.

How To Apply For Payment Protection Insurance

To apply for the Payment Protection Insurance you must first meet the age requirements of being between 18 and 65 and be working at least 16 hours each week, or be self-employed for at least a year or currently have a long term contract. If you fit these criteria you can apply when you apply for your loan.

The advantage to applying at this time (for the life insurance and disability insurance portion - no medical exam is required for mortgage unemployment insurance is you will not have a long waiting time to get approved nor will you need to have a medical examination. Plus, as soon as your loan is finalized your insurance coverage will be available to you. Also your premiums will be part of the monthly payment you need to make for your loan.

It is possible to apply of this type of insurance anytime after your loan is closed, but if you wait longer than 30 days you will need to provide a doctor’s statement that you are in good health to obtain the coverage.