Income and Payment Protection

Income protection insurance

Income Protection Insurance aims to pay out an income that equates to your after-tax earnings (less an adjustment for State benefits) if you become unable to work due to an accident, sickness or unemployment.  Most policies do not pay out right away, and most have limitations and exclusions which must be studied and understood before taking out any policy.  These terms will often vary significantly between insurers.

Payment protection insurance

Payment Protection Insurance (PPI) covers regular payments you make on borrowing or credit if you cannot work due to an accident, sickness or unemployment.  Income Protection pays a regular income in these circumstances.  These policies are sometimes called ASU (accident, sickness and unemployment) insurance.  Premiums can be high.

Depending on the policy, PPI may cover repayments (or a percentage of them) on:

  • A mortgage
  • A loan
  • Credit/store cards
  • Catalogue payments

Bear in mind that most PPI policies do not pay out right away, and most have limitations and exclusions.  For example, they will often only pay out for a limited period.