| Many insurers and insurance agents intermingle the | | | | contrast, an income protection policy is designed to |
| terms mortgage payment protection and income | | | | cover your earnings and the payout from the cover |
| protection (also known as permanent health insurance) | | | | can be spent in any way you see fit, including |
| and it is not difficult to see why. If you are looking for a | | | | mortgage loan expenses. It should also be noted that |
| policy that will provide some protection against the risk | | | | permanent health insurance does not cover |
| of illness, injury or unemployment then the term income | | | | unemployment (redundancy). |
| protection is naturally at the tip of the tongue. Insurers | | | | Policy Length and Purpose |
| and agents know this and specifically target it as a | | | | Payment protection is only a short-term type of |
| keyword. The issue is that income protection insurance | | | | mortgage cover, with policies typically lasting for either |
| is a completely different policy to what many | | | | 12 months or 24 months. This is in contrast to income |
| consumers are actually trying to find, payment | | | | protection where policies can last all the way up to |
| protection insurance. Too frequently consumers end up | | | | retirement, if so wished. In this light, it could be argued |
| buying the wrong product by mistake because of this | | | | that the former policy type provides cover for |
| chasing of keywords. This article summarises the main | | | | short-term illness or injury (a broken leg, for example) |
| differences between these two policy types to | | | | whereas the later type of policy provides cover for |
| promote public awareness. | | | | more serious ailments (such as cancer or total |
| Policy Coverage | | | | permanent disability, for example). It should also be |
| Mortgage payment protection is designed to cover | | | | remembered that permanent health insurance does |
| your loan payments should you be off work due to | | | | not protect you from unemployment, whereas |
| accident, sickness or unemployment. The purpose of | | | | payment protection does (albeit for up to 24 months). |
| the policy is not to directly cover your income but to | | | | If you think that either of these policies may benefit |
| cover your expenses, and more specifically your loan | | | | your current situation and you would need more |
| expenses (you can also insure up to 25% extra for | | | | information beforehand in order to make an informed |
| home associated costs, such as utility bills). The | | | | decision you should consult your financial advisor or |
| quotation you will get will be based on covering these | | | | insurance broker who will have knowledge of these |
| loan repayments and not on replacing your earnings. In | | | | products and be able to assist you. |