Payment protection insurance, which is also commonly referred to as ‘accident, sickness and unemployment (ASU) insurance’, has traditionally charged all applicants the same flat rate, irrespective of their age, occupation, gender and smoking habits.

This had made it attractively straightforward to understand and easy to arrange. But it has also meant that many people have struggled to afford the costs, particularly younger individuals who are still living off modest incomes.

Even the best value independent specialist payment protection insurance providers have tended to charge in the region of £4 a month per £100 of monthly cover, and profiteering banks and building societies have often charged 50% to 100% more than this.

Young people make fewer payment protection insurance claims than older ones because they are less likely to go ill and tend to get a new job more quickly when they find themselves out of work. It is therefore arguably unfair that they should have to cross-subsidise their older counterparts.

The new age-related payment protection product from British insurance does away with this unfairness but still maintains most of the simplicity of standard payment protection insurance. An applicant’s occupation, gender and smoking habits are still disregarded, but the big difference is that their age is taken into account when calculating the payment protection insurance premiums.

Premiums are therefore determined both by the amount of payment protection insurance cover that the applicant chooses and by their age. But it is important to realise that it is only their age at the time of taking out the payment protection insurance policy that matters. Premiums will not increase just because they get older.

The payment protection insurance premium will also vary slightly according to the exact type of age-related payment protection insurance required. It can be possible to have age-related income payment protection insurance, which protects the applicant’s overall lifestyle, age-related loan payment protection insurance or age-related mortgage payment protection insurance – which are linked to specific debts.

In some cases payment protection insurance premiums for the new age-related approach can cost young applicants under half what they would have to pay to take out standard payment protection insurance cover with even the best independent specialist providers.

Nevertheless, like all payment protection insurance, the new age-related payment protection insurance cover from British Insurance contains some significant exclusion clauses that should receive due consideration.

Medical conditions that existed prior to the start of the payment protection insurance policy (so-called ‘pre-existing conditions’) are excluded – although this exclusion is waived if you haven’t suffered from the relevant condition for at least two years from the date on which you first become unable to work.

The self-employed are only covered for involuntary unemployment if they permanently cease trading, and even employed individuals are not covered for voluntary redundancy, which can be a common way of exiting employment in some industries.

Potential payment protection insurance purchasers should also realise that another product known as ‘income protection insurance’, which does not cover involuntary unemployment, can sometimes prove more suitable for those requiring much longer-term health cover.

Mortgage Insurance

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If you are in the process of buying a home, you might be surprised at just how expensive it is.  Not only are there the actual monthly mortgage payments to take into account, but  there are also the completion fees, survey costs and solicitor fees, among others.  This may be one reason many people don't get mortgage insurance, since the payments they already make are so expensive.

However, mortgage protection insurance is important because if you don't have it, you could be caught short if for some reason you have some kind of difficulty and can't pay your mortgage for a time.  In the end, this trouble will cost you far more than any extra mortgage insurance premiums you might have to pay.  You may also be able to get mortgage insurance very cheaply, depending on what your circumstances are.

The Benefits of Mortgage Insurance

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Most obviously, mortgage insurance benefits you because it offers you protection against any unexpected financial problems you may encounter that would leave you unable to pay your mortgage payment.  This can be sickness, accident or unemployment.  However, if you have mortgage insurance, at least you won't have to worry about not having a roof over your head while you worry about these and other problems.

Have you thought about Accident Disability Insurance?

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For example, if you happen to be a victim of a car accident and you end up with a broken leg or two, you may have to be out of work for a period of time.  Many recuperation periods for these types of injuries last about six to eight weeks.  Of course, you can be out of commission for an even longer period of time if injuries are more serious.

Now, if this were you, you can see how you might struggle to try to make your mortgage payments if you don't have mortgage insurance.  Of course, you may have savings, but if you're injuries happen to be serious enough that your time off of work will be protracted, this is going to be a consideration, because you'll also need to be covering other expenses such as groceries and the electric bill.  This is where mortgage insurance will help you financially so that you can use whatever savings you have to meet other necessary expenses beside your mortgage.

Low Cost Mortgage Protection Gives Peace of Mind

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It might surprise you to know that mortgage insurance is not that expensive, although many people think so and usually try to forego it.  It does, indeed, involve a bit of extra cost, but not very much.  In fact, it may even cost you as little as a couple of pounds a month.

If your lender or other entity has given you a high quote, take heart.  These are some of the most expensive ways you can actually get mortgage insurance, and it's much cheaper to shop around online.  In fact, you can save as much as 40% over what the high street insurer or broker might offer you if you do buy your mortgage insurance online.

If you're still unsure as to whether or not you need mortgage insurance, take a moment to discover what the cover entails.  You may think, for example, that you're young and healthy and won't be needing such cover for a long period of time.  However, becoming sick or suddenly losing your job may not be things you can predict.  Therefore, it simply makes sense to have mortgage insurance.  If you're still confused about what it covers, ask your advisor to explain it to you clearly and simply so you can see just what it has to offer you.