Payment Protection

Payment protection is the popular term used to describe insurance cover which provides you with a means of continuing to pay your mortgage if (say) you lose your job or become incapable of working. (When you take out a mortgage, life cover is usually taken care of through an endowment or mortgage protection policy).

Payment protection is aggressively sold to homebuyers who take a mortgage to pay for the property they're buying.

If you're offered a payment protection policy, check carefully what it covers. The most basic type might cover your mortgage payments if you lose your job. Additional cover is available for such risks as accident, sickness and longer-term unemployment.

Before signing up, check the policy details carefully to make sure you're aware of what you're buying and what's excluded.

Payment protection is worth considering if it gives you piece of mind - bear in mind that social security (DSS) support for distressed mortgage payers is limited.

See Also: Mortgage Centre and Mortgage comparison Service for the latest facts and figures.

Last Updated: February 2008 © Moneyextra.com

Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.