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Income protection or mortgage/loan protection?

Some advice given on this subject is misleading. It depends entirely on your individual circumstances as to whether you want one or the other, or even both types.


What many articles on the subject forget to highlight, is that while an income protection product may last 25 years, the vast majority of mortgage and loan payment protection products are only for 12 or 24 months.


The average duration of an income protection claim is 8 years, compared to a few months on a mortgage or loan payment protection policy.


It has even been suggested that the reason lenders push mortgage and loan protection products is that they are happy for you to be protected for a short time, and thus ensuring they get paid. But, if you were unable ever to work again, they would expect you to sell the house to recoup their money.


An income protection policy may remove the need for payment protection insurance, and mortgage payment protection. The latter two can be cheaper but are for short periods. However, they tend to include unemployment cover, which most income protection does not.


It is not life assurance


To avoid using the often disliked words " life assurance “ some insurers have developed unfortunate ways of describing life policies as " protection ' policies. Some insurers use the term " protection " policy to mean 'Income Protection "


Income protection policies do not pay out a pre-selected amount when you die, for this you need a life policy.