Payment Protection Plans

In order to safeguard against the unexpected, it may be a good idea to opt for a PPP (Payment Protection Plan) when taking out a personal loan. Payment Protection is an insurance feature to cover you should certain events occur (i.e. illness or redundancy) and are paid for through a Direct Debit every month.

Independent insurance companies, with usually better terms and conditions than that offered by the lenders themselves, also offer payment protection. Good payment protection plans insure your loan repayments for usually around 12 months, in case an accident, unemployment or an illness leaves you unable to work. These policies are also called ASU (Accident, Sickness and Unemployment) cover. In case you are self-employed, some policies will also cover you for bankruptcy or insolvency.

You are also required to define a “deferred period” which is the length of time you will need to wait before your payments begin in the event you make a claim. A longer deferred period will usually lower your premium as well. This depends on your lender so be sure to check the specific policies first.