Designed to provides short-term earnings cover against the risk of accident, sickness and unemployment, with policies paying out for a maximum period of 24 months.
Short term policies do not tend to be as comprehensive as the traditional options which is highlight with their being no medical underwriting and reviewable premiums.
Mike and Jenny, an engineer and nurse from London, took out a salary protection policy to cover their joint monthly mortgage payment of £1,000 plus an extra 25% for associated home costs.
They decided to split the benefit in a 50:50 ratio so that the policy would payout £625 if either of them were off work. After six months of taking out the policy Mike was made redundant which kept him out of work for 4 months.
With their chosen deferred period of 30 days (with no back to day one cover) the policy made its first payment of £625 on day 61 of their claim (having accumulated from day 31).
Over the 4 months the policy made 3 payments of £625 before Mike was able to return to work, totalling £1,875. Thus, via his loan protection insurance Mike was able to keep up with his share of the joint loan repayments whilst he was
If you fail to maintain premiums, the contract will lapse without value, and you will lose the valuable benefits secured.