Insurance can be complicated to understand for many Brits. Terms are often very similar but have quite different meaning from a product and coverage perspective. For instance, income protection cover, a long-term insurance solution that pays benefits up to retirement, is often confused with income payment protection, which is a short-term plan under an umbrella of payment protection insurance (PPI) products. These two products are very different, but often are known by overlapping terms.



Income protection cover is not designed to provide short-term advantages in the way that income payment protection is. Income payment protection typically covers up to 50 percent of a covered individual's normal monthly income. While this is the lowest of the three common types of payment protection, the benefits of this short-term insurance are great. Income payment protection covers accident and illness, but also covers involuntary redundancy. Income protection cover does not provide unemployment benefits, nor does the State. This is part of the unique offer from income payment cover.

Although total allowable coverage is a bit lower for income payment cover than other PPI products, it offers the greatest flexibility. Plans can be arranged to specifically support mortgage, rent, household bills, loans, and virtually any other regular or common monthly expense an individual wants to protect. While the cover does not completely make up for loss of income, it is a great support and can be supplemented by savings, other insurances, and some minor support offered to certain individuals, from the State.

As mentioned, income payment protection insurance is different from income protection cover in that its benefits are short-term in nature. Payout periods are generally one to two years, with payments come in monthly instalments. Payment benefits usually begin from 30 to 90 days following coverage origination. The benefit maximum for income payment plans is 1000 pounds, or the 50 per cent of income level, whichever is lowest.

Although payment protection insurance products have been around for sometime, they have often been an overlooked or misunderstood insurance product. Part of the misunderstanding can be directly attributed to deceptive selling techniques used by large banks and lenders. These institutions have often combined the protection products with the loan products in order to package them. This puts pressure on the borrower to feel an obligation or buy the insurance with the loan. Some providers did not even mention the insurance, but simply added it on and noted it in the fine print.

More and more consumes are recognizing the greater benefits in payment protection insurance from specialized brokers who are out for their best interest. Whereas income protection cover helps with long-term needs, income payment plans are a financial security for the insured's short-term needs. Some people cannot last long without monthly income and need to pay the small premium charged by brokers to secure their key assets and cover their expenses. Broker premiums are usually 40 to 80 per cent less than those charged by institutions. Their services and enhanced benefits make their products better overall.