Payment Protection Plans: Why We Need Them
When faced with a significant reduction of income due to job loss or disablement, payment protection plans protect families from the possibility of losing their homes and/or other primary investments.
As we do this thing called life, it’s inevitable for most individuals and/or families to incur some type of debt. It’s nearly impossible (unless one is independently wealthy) to secure the basic necessities of life, i.e., food, clothing, and shelter, without taking out a loan or two somewhere down the highway of living.
For most people, the largest debt payments on the books are mortgage payments and other short-to-mid-range debt obligations such as vehicle loans, personal loans (incl. student loans), and credit card repayment accounts.
Allowing for these debt obligations plays a major role in each individual’s or family’s annual budget. In addition, payment protection plans, such as payment protection insurance (PPI) should also be a major consideration to ensure financial stability and safety.
What is Payment Protection Insurance?
Payment protection insurance provides the necessary income to maintain a borrower’s debt obligations in the event of significant reduction in income resulting from a job layoff, a severe accident, a critical illness, or even death. In short, PPI can be one of the most important payment protection plans an individual or family can purchase.
For the most part, payment protection plans are purchased through the various lending institutions providing the original financing. However, third-party PPI polices are also very popular and can be purchased for a variety of debt obligations; including personal loans and credit card repayments.
To qualify for a PPI policy, consumers need to have verification of employment of at least 16 hours a week, be at least 18 years of age (but not typically older than 65, even though there are exceptions here), and agree to a waiting period (while paying premiums) before any benefits are dispersed. This period varies from provider to provider but is usually no longer than 90 days.
Payment Protection Plans: A Brief Conclusion
It’s true. Many will scoff at the idea of purchasing yet another insurance policy that may never be used. The fact remains, however, that the ramifications of NOT having payment protection plans in place to keep your most valuable investments safe (your home and your family) are much greater than the policy investment itself.
