Wednesday, November 7, 2012

How Can Income Protection Insurance Protect Your Mortgage?

By Sally Rider

A lot of people work for the money. They use their salary to purchase stuff and pay for bills. But today, no one has job tenure even if you've been working for your company for the past ten or twenty years and if you are highly dependent on your salary, you will surely suffer a financial tragedy. You may not be able to stop it if you lose your job due to redundancy or if you've been replaced by technology but you can avert financial meltdown by having income protection insurance coverage. Income protection insurance will also help you out financially if you come down with a serious illness or accident that prevents you from earning a living.

Income protection insurance can protect your mortgage as well. Income protection insurance is a form of payment protection insurance which provides its policy holders with financial assistance in a form of a monthly earning to assist you in dealing with your regular expenses and other dues you may have to pay. These payments may include your children's education expenses, household and utility fees, your debts, credit card payments, and even your loans such as your mortgage loan.

It comes with two types. The first type of income protection cover is short term. You can start getting your insurance claim from four to six weeks after losing your job providing your employer can verify that you did not leave your job voluntarily. But as we mentioned, since this is short term, your insurance claim has a cap off period wherein the pay stops. Normally, this can range from 12 months to 24 months or just until you are already back on tip top condition.

The other type of income protection is the long term coverage. This type of coverage will be there with you for the long haul. How long exactly? Until your retirement age.

Anyone living in the United Kingdom over the age of 18 and under the retirement age of 60 for women and 65 for men can apply for income protection insurance. But you also need to meet other requirements of insurance companies to be considered eligible for income protection insurance. For instance, you need to be working currently when you apply for income protection insurance and you also need to be someone who's been working continuously for the past six months to be able to qualify.

In getting income protection insurance can be quite tricky given the exclusions, termination details, benefits, perks, and eligibility criteria, and waiting periods, which the policy holder should be familiar with. You should be very attentive in knowing these details. One important detail you should focus on is the exclusion period which covers the commencement date of your insurance policy and until such time that you can obtain your insurance benefits. The average time frame of the exclusion period may be typically around 3 months. Reading the small print of your insurance benefits can help you ensure that you are able to get the right kind of insurance policy for you. You can maximize your income protection insurance to be able to finance for your mortgage needs as well.

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