Top tips when buying payment protection insurance

When buying a payment protection insurance policy, there are things to bear in mind to ensure that you get the right deal.

But first of all, what does the cover do?

In a nutshell, payment protection insurance - PPI – provides you with a tax free income every month if you lose your own due to involuntary redundancy, or accident or illness. It helps you keep financially afloat at an otherwise difficult time.

So how do you choose the right cover?

The main considerations when choosing cover are:

• Price – buying from a standalone provider rather than a high street bank or lender can make substantial cost savings
• How long do you want benefits to run for? (most policies run for 12 or 24 months in the event of claim)
• How soon can you make a claim after being made redundant or incapacitated? (this can vary among providers from 30 – 90 days after the covered event happens)
• And, eligibility. This is very important as buying a policy that you will not be eligible to claim on means it is not worth the paper it is written on. Here we look at it further.

Checking for eligibility
You will need to check to ensure that you will be eligible to make a claim against any policy you were thinking of taking out as all come with exclusions. The amount of exclusions could vary with some providers adding in just the most common ones and others including numerous.

The most common exclusions include you having to be in full time and have been working for 6 months at least prior to applying for the policy.

You also typically need to be living in the United Kingdom, the Isle of Man or the Channel Isles in order to take out cover.

Other possible exclusions
Do you be self-employed then you will need to check the cover very carefully before taking it out. Usually you will only be eligible to claim if you were to have to cease trading permanently and through no fault of your own.

You will also need to check carefully if you have an illness that is pre-existing as there can be a great deal of exclusions surrounding any ongoing illness that do leave you unable to work.

In summary, by looking at the your payment protection options carefully, you can choose the right cover for you.