Payment Protection Insurance vs. Income Protection Insurance

What is Payment Protection Insurance? What is Income Protection Insurance? Are they the same or are they different? Have you ever wondered what their differences may be? Well, it took me quite a while to figure out what are their differences and the difference of the when will they be used in certain circumstance.

According to what I have learned, Payment Protection Insurance is very much different from Income Protection Insurance. Why? First and foremost, Payment Protection Insurance is an insurance product while Income Protection Insurance is an insurance policy.

The Payment Protection Insurance enables consumers insure repayment of loans if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that may prevent them from earning income to service the debt.

The Income Protection Insurance is an insurance policy paying benefits to policyholders who are incapacitated and hence unable to work due to illness or accident. It is available in Australia, Ireland, New Zealand, South Africa and the United Kingdom. The Income Protection Insurance is formerly called Permanent Health Insurance (PHI).

Did it lighten up your thoughts about the difference between Payment Protection Insurance and Income Protection Insurance? Well, it also took me quite some time to be able to fully understand their difference but let me break more of their differences down for you:

Payment Protection Insurance

What is it?

The Payment Protection Insurance was initially designed to provide loan payment protection, such for mortgage, against the risk of accident sickness or unemployment. When I researched more about it, I learned that it is now available to cover general income rather than a specific loan.

How long will the policy cover for me?

The Payment Protection Insurance usually has a pay-out period of up to 12 months thus only covering short term acute conditions.

Guaranteed Premiums

Premiums are reviewable thus insurers are free to increase their premiums at any point.

Medical Underwriting

Any pre-existing medical conditions are usually excluded automatically making the cover provided unclear.

Income Protection Insurance

What is it?

Income protection insurance is designed to cover your earnings in case you cannot work due to illness or injury, although some policies allow you to add redundancy cover, although this is not very common.

How long will the policy cover for me?

Income Protection Insurance can pay-out until retirement thus fully covering serious medical conditions. I have a friend of mine that once had an accident and he was able to use his even though he is not yet retired.

Guaranteed Premiums

Income Protection Insurance is usually possible to fix the monthly premiums over the life of the policy.

Medical Underwriting

Income Protection Insurance policies are underwritten upfront so it is made clear from the outsets if an existing condition is not covered.

There you have it, the differences between Payment Protection and Income Protection Insurance. When you do want to distinguish their difference, all you have to do is list all the important factors and compare if ever they have difference. In this case, they really are different from each other. In a sense, both of them can help people with their insurance. The next question of this is which one will then be much advantageous? Basing from all of the things I have presented, I leave that answer to you.

You Might Ask Who We Are So…

Having mis-sold PPI is simply not the best experience that you could have experienced. It is actually not fair at all. The Payment Protection Insurance should be able to help you cover your debt repayments whenever you are ill, unable to work or due to redundancy. I too, have been a victim of this sort and I was so frustrated that I have to experience this. I say, we should start reclaiming our PPI for we deserve it.

I and my team of University students will help you to be able to reclaim your refunds as quick as possible. Through our extensive research and personal experiences, we will help you by giving you steps and tips. We will provide you more information so that you may know more about what you are dealing with. Reclaiming the PPI’s may not be very easy but we will be doing our very best to be of service to you.