There are three main forms of unemployment cover which can be taken based on your circumstances. Mortgage, loan and income payment protection would all allow you to insure against the possibility that you could lose your income through unemployment. With redundancies happening all the time and no ones job safe some thought needs to be given to how you would manage financially until you found work again. You would have to take into account that work can be hard to find and it could take many months.
Mortgage unemployment cover would ensure that you would have the money each month to be able to continue financing the repayments of the mortgage. You would not have to worry about falling into arrears with the mortgage and the lender taking you to court to seek repossession of your home. Your policy would payout for the time stated in the conditions which needs to be checked before taking out the cover. Without a policy a single missed payment is enough for the lender to send you a letter. Another missed payment and you would have to make an appointment to see the mortgage lender and come to an agreement to repay arrears while maintaining the repayments. However as you did not have the money in the first place to cover even the repayment, this would be impossible.
You could also cover your mortgage repayments with income payment protection. This policy would also allow you to pay other essential outgoings at the same time. For example you could also pay loan repayments, credit card repayments and also keep food in the larder and your home lit and heated. With income payment protection you would not have any financial worries if you did lose your own income.
Loan payment could be covered with loan payment protection. This type of policy would be ideal if you were one of the lucky ones without a mortgage. You would cover what you payout each month or up to a certain amount and then receive this back each month. This would mean you would not get behind and risk earning a bad mark against your credit rating.
Keeping your credit rating in good order is essential if you want to borrow again in the future. Lenders will look at this before deciding if the will allow you to borrow and if you have a mark due to missed payments then they will see you as a bad payer.
All payment protection policies taken out as unemployment cover would begin after a certain period of time. This would be stated in the terms of the policy. It would also only payout for a certain period and then it would cease. Usually providers would ask that you defer from claiming for at least 30 days and with some providers it could be up to as much as the 90th day before you are able to claim. However some will offer to payback to day one of your unemployment so that you do not lose out. You can find providers offering to payout for either 12 monthly payments or 24 monthly payments and after this time your policy would end regardless of whether you have found work. In the majority of cases this is ample time to have looked around for work and found a position.
Author Resource:-
Simon Burgess is Managing Director of the award-winning British Insurance (http://www.britishinsurance.com), a specialist provider of low cost income payment protection insurance (PPI), mortgage payment protection insurance (MPPI) and loan payment protection insurance.
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