There are three types of insurance available if you lose your job:
- Mortgage payment protection insurance (MPPI). You might have taken out this type of insurance along with your mortgage. It typically starts to pay your mortgage repayments three months after your earnings stop and continues to pay out for up to 12 months.
- Payment protection insurance (PPI). This is sometimes called Accident, Sickness and Unemployment (ASU) cover. You might have taken out this insurance with a personal loan or credit card. It helps you to keep up your loan repayments by paying out a set amount for up to 12 or 24 months. Payments typically start three months after your earnings stop.
- Short-term income protection insurance (STIP). This insurance replaces a proportion of your income for a fixed period of time (usually 12 or 24 months). It’s important not to confuse this with other income protection policies, which usually won’t pay out if you lose your job.
In the past, because of the way payment protection policies were sold, you might not realise that you already have this cover.
Ask your lender whether your mortgage, loan or credit card is covered by insurance.