When people are looking to protect mortgages or loans from accident, sickness or unemployment they do not automatically think of payment protection insurance. Not being insurance industry professionals the natural term or phase to search for is income or earnings protection, even though income protection insurance is a completely different product entirely (also known as permanent health insurance).
Most of the confusion comes from the fact that most people do not understand that although payment protection does protect earnings it does so indirectly. It does so indirectly because it protects monthly expenses (such as loan repayments) which are deducted from monthly earnings, rather than protecting those earnings directly. On the other hand, permanent health insurance does protect earnings directly and is designed to cover not only specific monthly commitments but also general living or lifestyle expenditure. To be complete, the other main differences between payment protection and income protection are that income protection is a long term policy to cover incapacity only and payment protection is a short term policy to cover accident, sickness and unemployment.
As insurance brokers our business too frequently comes across people who have mistakenly bought an income protection policy when a payment protection policy would have been far more appropriate, and far cheaper. For a start, income protection does not cover redundancy which is a key factor as to why people take out payment protection - due to the fear that they will not be able to make their loan or mortgage repayments if they were to lose their job, especially in these uncertain times.
It is not difficult to see why so many people are walking away with the wrong insurance product when the marketing strategy of so many insurers and agents is to promote payment protection under the umbrella of income protection, simply because that is what they think the public will search for. There should definitely be a call for more stringent insurance industry standards to ensure the separation of the terms income protection and payment protection, and in doing so a separation of the confusion. A separation of these terms on website pages and marketing materials will surely help to stem the flow of policies bought mistakenly. If companies intermingle these terms excessively and even more polices are bought mistakenly then there are likely to be a large flow of complaints to industry bodies, which may tarnish the insurance industry as a whole.
Florida Auto Insurance
