For many, payment protection is a great option and something that they chose to take out when they take out credit in order to protect themselves should anything untoward or unfortunate happen. For many however payment protection is something that they could leave off their monthly bill in order to save them money. Before deciding whether or not to take the cover you should understand exactly what you are covered for and decide whether it is a good option for you.

Your level and type of cover will depend largely on what sort of credit you are taking out - there are generally 4 different types of cover yet it is always advisable to request and read the policy details of individual payment protection plans before signing up.

Payment Protection Insurance for Mortgages

This insurance covers monthly mortgage repayments for an agreed time period. Usually, the insurance company will make monthly repayments for 1 year but it does vary between 12-24 payments. After this period you will have to make the monthly mortgage repayments yourself whatever the circumstances. Often you can make further claims at a later date but there must be a gap where you meet the payments yourself.

Payment Protection Insurance for Credit and store cards

This insurance will usually pay off a set percentage of your outstanding balance or alternatively, the minimum payment each month and will normally do this for up to a year. It is important to check which option you are being offered - if you have a large debt for example the set percentage to be paid off each month may be less than the minimum payment meaning that you will still need to make payments each month.

Payment Protection Insurance for Loans

The insurance offered with loans will usually cover the full monthly repayment for your loan and will again usually cover you for 12 or 24 months.

It is always important that you read through all documents so you know what you are protected against.