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How much does it cost?
For Income Protection (PHI), the cost of your plan will be based on many factors including your age, medical history, lifestyle, type of job, your immediate family medical history, as well as the amount and term of the requested cover.
It is also based on statistics using the above information, which helps the insurer gauge the likelihood of you making a claim.
Therefore the younger and healthier you are, the cheaper the cost.
For Mortgage Payment Protection Insurance (MPPI), this usually is a set amount for each £100 of cover you require and does not take into account your personal circumstances. Therefore MPPI will not cover certain circumstances and usually does not cover any pre existing conditions.
How do I get a quote?
What is income protection?
As the saying goes, this does exactly what it says on the tin, this is cover designed to replace your income in the event of sickness or long term illness.
This can also be set up to cover unemployment as well.
This can be used to cover a set payment, such as a mortgage, or to cover a proportion of your income to help protect your family and lifestyle.
How does it work?
There are 2 key types of cover for this type of plan:
Income Protection (also known as Permanent Health Insurance or PHI for short)
This is long term cover designed to cover you for a set period of time, usually until you return to work or retire, whichever is sooner.
It can have a varying waiting period dependant on your circumstances, usually a minimum of 1 month up to 12 or even 24 months.
As the name permanent suggests, this plan is set to run for the whole term and can be claimed on a number of times. The price can be guaranteed at the start and you can also link the plan benefits to rise in line with the cost of living etc.
Mortgage Payment Protection Insurance (MPPI)
This is also known as Accident, Sickness and Unemployment cover and is a short term plan designed to cover mortgage payments.
It can have a minimum waiting period of 30 days, but can then be backdated to the first day of illness. It usually only pays out a maximum of 12 or 24 months and is not designed as income replacement, more as a short term solution for minor illnesses.
Over recent years MPPI has had a negative attitude to it as it has been associated with PPI, sold by banks inappropriately with loans.
This is similar in design but different in the manner in which it runs. PPI was often a lump sum added to the loan, whereas this is a monthly payment, like any other insurance.
This type of plan is usually more common for people who want short term cover for a specific purpose only. Many of these plans are renewed yearly and can be cancelled in the event of claims being made.
This is a brief summary of 2 complex products so please contact us if you have any questions on how they work.
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