Difference Between An Income Protection And Mortgage Protection Policy?

Income protection policy will help you save your monthly earnings when you are out of job due to sickness, accident or disability

. Your insurance company will pay you 60 to 70 percent of compensation which you can use for your monthly expenditure. A solace when you are out of income and there is some form of earnings coming in to meet your day to day expenses. You are free to use it for any bill payment, grocery bills, credit card, loan payment or medical expenses.

On the other hand mortgage protection also safe guards you when you are out of employment temporary or permanent. But these payments will be made towards your mortgage EMIs. This will save you from confiscation of your collateral due to loan defaults. You are on time with your mortgage payments and no creditor will send any threatening letters or make any calls for non payment of loans. As you would be traumatized when you are bed ridden, it would be difficult to bear the financial brunt of loan payments or face any harassing calls from creditors. This is the only way to protect yourself from any kind of embarrassing situation and any sort of eviction.

If you fall back on loan payments, then you are jeopardizing your collateral. A lender may ask you to vacate your place and they may even start repossession proceedings. Even a single missed repayment can cost you big time. When you are sick, you need money to cover up your medical expenses, you are also temporarily out of job. No one will be in a position to keep up with repayments under such circumstances. Hence, if you have a policy in place it will protect you in these circumstances. Make use of it!

Choose your protection policy carefully. Consider a policy that suits your needs well. It should be a comprehensive one that can cover most of your needs.

Income protection insurance would not payout if you were to become unemployed by redundancy. It would cover you in case you should fall ill or if you had an accident that meant you were unable to work. A mortgage policy may not cover you for long, kindly cross check these details for how long are you covered. Another big difference between redundancy policy and income protection is that it would provide long term protection, up to the age of retirement if needed.

by: Kirthy Shetty

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