Are
you suffering from payment protection overload?
Payment protection insurance options
Critical illness insurance:
Critical
illness insurance will cover you in the
event of a serious illness such as cancer,
coronary artery by-pass surgery, heart attack,
kidney failure, major organ transplant,
multiple sclerosis and stroke. Additional
conditions covered by this insurance can
include aorta graft surgery, benign brain
tumour, blindness, coma, deafness, heart
valve replacement or repair, loss of limbs,
loss of speech, motor neurone disease, paralysis/paraplegia,
Parkinson's disease, terminal illness and
third degree burns. Not all insurance companies
will necessarily cover all of these illnesses,
whilst some insurance companies will cover
more; it is always worth reading the terms
and conditions before you sign anything.
Critical
illness insurance policies typically offer
a tax-free lump sum if you are diagnosed
with one of the above illnesses and meet
the conditions outlined in the policy contract.
The lump sum is most often used to cover
the remainder of the mortgage, although
can be spent on home alterations or medical
care etc.
Life
insurance:
Life
insurance is usually taken out if your family
or partner is financially dependent on your
income. Life insurance can also be purchased
as life assurance and in this form, can
offer a method of protection cover and savings.
However, most people simply use it as a
form of financial protection for their mortgage
and therefore their family. There are three
main types of life insurance: term insurance,
whole life insurance and endowment insurance.
More information can be found on these forms
of life insurance on the Association of
British Insurers website, listed in the
resources section of this article.
Mortgage
life insurance:
Mortgage
life insurance is essentially the same as
a decreasing (lump-sum) term life insurance
policy and is designed to pay out a lump
sum upon the death of the policy holder,
should it occur during the term of the mortgage.
The size of the lump sum will decrease over
the term of the life insurance policy, in
the line with the outstanding mortgage repayments.
E.g. As you pay off your mortgage, the amount
of cover will decrease as the need is less
significant.
Mortgage
protection:
Mortgage
protection, also called mortgage payment
protection, is a type of insurance that
can help protect mortgage payments and associated
household costs in the event of unemployment,
illness or an accident. Through mortgage
payment protection, you can insure your
monthly mortgage payment, monthly life premiums
and the monthly cost of your buildings and
content insurance. Typical mortgage protection
cover could include:
- Unemployment
and disability insurance cover
-
Accident or sickness
-
Unemployment only insurance cover
-
Disability only insurance cover
- Loan
payment protection:
Loan
payment protection policies are designed
to protect the repayments to any loans you
may have taken out. They work on a similar
basis to mortgage payment protection, but
for a wider scope of borrowing. Premiums
for loan payment may be greater than those
for mortgage protection.
Income
protection:
In
the event of unemployment, sickness or an
accident, income protection insurance offers
a limited income. Do make sure you understand
the terms of the policy however, as the
income that you received through cover may
be significantly less than the income you
receive through employment.
Private
medical insurance:
Private
medical insurance is a policy which will
provide financial cover for medical treatment
in the event of an acute condition. According
to the Association of British Insurers,
the majority of insurers define an acute
condition as a disease, illness or injury
that is likely to respond quickly to treatment
which aims to return you to the state of
health you were in, immediately before suffering
the disease, illness or injury, or which
leads to your full recovery.
Private
medical insurance offers reassurance for
people who know that treatment is available
promptly, should they become ill or injured.
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