Loan payment protection is a short-term insurance cover that pays up to 75 per cent of normal monthly income for covered individuals. It is part of an umbrella of products known as payment protection insurance (PPI). Other related products include mortgage payment protection and income payment protection. Loan cover offers the highest allowable coverage, based on a percentage of income.

Loan payment cover is designed to provide the greatest premium to benefits ratio for short-term plans, therefore, most plans offer payment periods of one to two years. Longer-term protection is usually obtained through worked related health insurance or income protection. Typically, loan payment protection is intended to cover 100 per cent of the insured's monthly debt obligations, and up to 25 per cent of additional expenses, with a maximum total payout.

Covered events which trigger benefits under the insurance include illness and accidents, which are also covered by income protection. It also covers involuntary redundancy, which is not available under income protection products. Another nice benefit of many loan cover products is a death benefit, which is typically not available through other PPI products. This means that a covered person does not only ensure their family's financial security while they are around, they can also help by covering their surviving family's short-term needs in the event of death.

Loan payment protection, like other PPI products, is become more familiar to many Brits. For some time, people misunderstood their short-term financial options in the event of job loss. Some mistakenly believed the State would support most of their monthly needs. Others did not consider their needs in the event of an accident or prolonged unemployment. Many consumers were prey to the questionable selling practices of large institutional banks and lenders. These providers developed a reputation for deceptive selling, and even mis-selling, as they sometimes sold the insurance to unprotected people.

As consumer groups became more aware of problems, they began voicing their concerns to the Office of Fair Trading (OFT), which has since lead to a full investing of the PPI industry by Competition Commission. The clamour over the questionable business practices at high street banks and lenders has helped lead to proper credit being given to more reputable insurance brokers who specialize in the products. Brokers can usually offer premiums that are 40 to 80 per cent lower than other providers, and their independent nature enables them to maintain a greater focus on their customers? needs and best interests.

Loan payment protection can help alleviate much of the stress that is already present from prolonged unemployment. People forced out of work must begin the tedious process of looking for another job. Accidents and illnesses can lead to stressful recovery periods and an inability to enjoy one's traditional lifestyle interests and activities. By having financial security, at least covered people have the peace of mind to know that they are not going to lose their car, or their home. They can focus on recovery and looking forward to a better work experience in the future.