Payment protection schemes

You have a number of payment protection options to choose from. Basically this is insurance that covers your loan repayments (as well as your utility and medical bills). Payment protection will allow you to continue to meet your financial obligations in case you suffer a disability such as an illness or an accident that prevents you from going to work, or if you are made redundant at your job.

Payment protection is an option you can avail of through your lender at the time you arrange the loan. Keep in mind though that while convenient, the payment protection your loan company offers you may not be as a good a deal as one that a third-party agency may provide. Also, there are lenders that will not give you the option to include a payment protection policy unless you take it out at the same time you have your loan arranged.

However, you are not obligated to limiting yourself to the payment protection policy your lender offers you if you feel that you can get better terms through a third-party. Many companies can provide you with payment protection so you should check out your alternatives. You can even decide to avail of a policy in the future from an independent insurance company.

Personal Payment Protection or PPP covers almost all forms of employment. There are even policies available for self-employed individuals that covers possible instances of bankruptcy and insolvency.

Unemployment Insurance

Cases of involuntary redundancy are covered by unemployment insurance in order to provide you with a replacement income. The amount you will receive from the policy covers not only unsecured loan repayments but also important expenses such as mortgage payments or rent. If you decide to take out unemployment insurance, the premiums are debited directly from you every month.

In order to be eligible to take out unemployment insurance you have to be between 18 and 64 years old, a UK resident and employed on a permanent basis for more than sixteen hours per week. Should you know at the time of your application that you may be made redundant in the immediate future, you will ineligible for unemployment insurance.

If your redundancy is a consequence of misconduct, breach of contract or a criminal act, your insurance claim will not be validated.

If you are taking out a loan, you should seriously consider an insurance package to protect your repayments should something unforeseen happen in the future.

Accident, Sickness and Unemployment Insurance (ASU)

Cases in which you are unable to continue to work because of an illness, an accident or redundancy are covered under ASU insurance. You will need to pay monthly premiums to your insurance provider. In return, you are assured that your loan repayments are protected for a certain period of time (usually around twelve months).

The cost of your monthly premiums can be reduced by opting for a longer excess period. This is the amount of time that passes upon making your claim before the policy begins to pay out. Generally the excess period is set somewhere between three to nine months after the claim.

ASU insurance is offered by different providers, including possibly the lender that you are arranging your loan with. Your policy can be arranged over the phone or online at their company websites.