The only real answer to this question is that it depends. Different people may need payment protection insurance for different reasons. Others may get away with not having payment protection insurance at all. While having insurance for most things is a prudent idea, it may also be even more fiscally responsible to save money by not paying for insurance where you do not need it. We will discuss whether or not you qualify for this kind of coverage and if you even need it in the first place.
What is Payment Protection Insurance?
Payment protection insurance is a type of insurance plane you might need when you take out a mortgage or other kinds of debts such as credit cards, catalogue payments, and other loans. This insurance will pay to cover monthly repayments related to these debts if you are unable to work because of something like an accident, an illness, or unemployment.
Payment protection insurance is not required, but lenders will usually offer some kind of policy when you take out a loan with them. If you are trying to decide whether or not you want to pay for the policy you will need to decide for yourself if the benefits of having this kind of plan outweigh the amount that it costs.
Do I Need it?
Now that you understand what payment protection insurance is, do you actually need it? It is possible that you might be in a situation in your life where you feel this kind of cost is unnecessary. You will likely not need payment protection insurance if:
- You have guaranteed and regular income.
- Your employer provides a period of paid sick leave in the event that you fall ill.
- You are in a secure job and have very little risk of redundancy.
- You have a similar policy either separately or through your job.
- You already have an existing insurance policy such as life, serious illness or income protection insurance.
Am I Eligible?
There is a chance that you are not even eligible for payment protection insurance in the first place. There is a chance that you may not be eligible for this kind of insurance policy. You can not make a claim if you are
- Under 18 or over 65
- Working less than 16 hours a week at your job
- Aware of the fact that you may become unemployed in the near future
- Self-employed and go out of business
- A temporary/contract worker and you lose your job
- Aware of an existing medical condition
- Unable to work because of certain common conditions, such as stress or backache