Protecting your income or loan/credit payments :Cross Stitch – Money, tax and benefits

Payment protection insurance (PPI) covers regular payments you make on borrowing or credit if you can’t 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 don’t pay out right away, and most have limitations and exclusions. For example, they will often only pay out for a limited period. Find out more on the Money Advice Service website.

Income protection insurance aims to pays 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. As with PPI most policies don’t pay out right away, and most have limitations and exclusions.

When you buy insurance you can shop around yourself and buy direct after comparing products, or use an insurance broker. You can compare PPI on the FSA’s Comparison tables.

Anyone selling PPI or income protection insurance in the UK must be authorised by the FSA. This means they must follow certain rules and standards when dealing with you, and give you information explaining the service and products they offer.