MI_29-30_protection.qxd 22/1/09 14:43 Page 3
Protection | 29
Cover all
options
With everyone suggesting you sell
protection products to make up your
income, here is a reminder of exactly
what is available in the protection sector
very day we hear of yet another unemployed through no fault of their own. It is
E
horror story relating to the Credit sometimes known as ASU (accident, sickness and circle6
policy.
Find out whether the policy is a single or regu-
Crunch. As we were going to press unemployment) insurance, Account Cover or lar premium. If your client buys a single pre-
it was announced that unemploy- Payment Cover. mium policy they pay a lump sum of 3-5
ment rose by 131,000 between PPI can provide worthwhile cover against years’ worth of premiums in advance. This
September and November 2008 unexpected changes in your client’s personal cir- amount is added to the sum they borrow and
and now stands at 1.92 million. cumstances, but bear in mind it does have limita- attracts interest, so they'll be paying more over
And that does not include the tens of thousands tions and exclusions. It is useful, but your client the long run.
of jobs cut since November. At least one forecast, may not always want it or be able to claim on it This example shows how much more a single
by Capital Economics, suggested it could reach when you need to. premium may cost.
three million by Christmas 2010. T Loan £2,000
Increasing the maximum size of mortgages circle6
hings to bear in mind:
PPI only pays out for a set period of time, gen- Loan interest 200
covered by Income Support For Mortgage
Interest from £175,000 to £200,000 was helpful circle6
erally either 12 or 24 months. Total loan cost £2,200
To claim on the unemployment part of the
as was reducing the waiting period to qualify by policy typically your client must have been PPI premium £250
two-thirds to 13 weeks. However, they are not employed continuously by the same company PPI interest 30
measures to help everyone. For instance the help for the last 12 months on a permanent con- Total PPI price £280
will not be available to couples with joint mort-
gages in a situation where one has been made circle6
tract.
Check carefully if your client is self employed Total cost of loan with PPI £2,480
redundant. So what can your clients do to pro- and requires cover – the policy may not cover Total cost of loan without PPI £2,200
tect themselves through the next, unpredictable
months and years? Here is a reminder of what is circle6
them.
Your client may not be able to make a claim circle6Also, think about what your client would do
available to help them. for an illness they already have or have had when the claims payments stop and they are
before. Make sure you check this before they
Accident, sickness and take out the policy. This will be called a pre- circle6
still unable to work.
Like all insurance, PPI policies will generally
unemployment protection existing medical condition and can include include a number of exclusions or conditions
Payment protection insurance is insurance that any medical conditions they have – or have that will prevent your client from claiming on
will pay out a sum of money to help your client
cover their monthly repayments on mortgages, circle6
had. the policy.
Stress or back complaints, and possibly other
loans, credit/store cards or other payments if conditions, may not be covered, even if your Mortgage payment protection
they are unable to work. This could be because client can't work because of them. Again, it's MPPI, or mortgage payment protection insur-
they have an accident or sickness, or become worth checking before you recommend the ance, is private insurance that borrowers may
www.mortgageintroducer.com February 2009 Mortgage Introducer
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