“ Life assurance and critical illness insurance. „
I also took PPI insurance from Abbey, and cannot fault the insurance provider, but unlike the previous gentleman my PPI has affected the amount I receive from Jobseekers (income related).The amount related to my mortage has not affected my benefit but a loan related to a car purchase has. Jobseekers are treating this amount as income "stating that I don't have to pay it" therefore reduced my jobseekers allowance to £8.00 per week.Has anyone else had a similar issue?
Paymentcare is the Abbey product name for a mortgage payment protection plan to be used primarily in connection with a mortgage however it can be used to cover other outgoings in addition to your mortgage payments.
Of all the financial products that I have ever taken out or invested in this has probably been the best one as it has effectively allowed me to take 12 months off from the working world and to use that time to switch careers without the worry of paying for my mortgage or any other bills that I have to pay.
Purpose of Plan
The plan is designed to cover your mortgage payments and other bills in the event of you either suffering a period of loss of earnings due to sickness, accident or unemployment. It is possible to insure yourself for unemployment only or sickness and accident only or to combine the two risks.
This flexibility is useful as it allows you to take out the protection which is most suitable for you. In my particular situation my employer provided full sick pay for six months and half pay for a further six months therefore I chose to take out the unemployment cover only. For those who see themselves in an industry with zero unemployment but poor sickness benefits then they may decide not to include the unemployment cover. This will reduce the cost of the policy to the individual.
Applying and Eligibility
The most common time to apply for this cover is at the point in time that you take out your mortgage and this was certainly the way I did it completing the paperwork with the adviser who arranged the loan which in this case was actually me as I worked as a Branch Manager at the time. You can actually take the plan out at any time not just when you arrange the mortgage and in fact you do not have to have your mortgage with Abbey to take out the plan.
In addition to arranging the cover in the branch you can also arrange it over the phone or on-line through the website. The application is relatively short requiring the usual personal details as well as the level of monthly cover that is required. You will also complete a direct debit form as premiums are collected monthly however unlike other insurers Abbey do not charge a credit rate for paying monthly. Finally you will sign the declaration and with this particular policy it is important that you can satisfy the terms of the declaration otherwise you may find that any claim you make will be rejected, more on this later.
To be eligible for the policy you have to be between the age of 18 and 65, have a mortgage with a UK lender and be in employment of 16 hours per week or more. Plans can be taken out in either joint or sole names.
The plan is underwritten and administered by Norwich Union on behalf of Abbey.
So what do you get for your money and how much will it cost?
You can pretty much choose the level of benefit that you want however the minimum benefit is £100 and the maximum monthly benefit is £2,000. You do not need to cover the whole of your mortgage payments however if you want you can take out a policy up to the maximum amount possible. The only other restriction on the amount of cover you can select is that it cannot be greater than 50% of your monthly pay therefore to be able to take out the full £2,000 a month you would have to earn £4,000 a month.
In the event of you being unable to work due to either sickness, accident or involuntary unemployment then no payment is made for the first 28 days however payments will then be made for up to twelve months or until you return to work whichever is the sooner. A couple of important things to note. The first is in the case of unemployment then it must be involuntary unemployment. You cannot just pack in your job and decide to claim for 12 months, likewise voluntary redundancy is not covered however involuntary redundancy is.
Secondly you will not receive benefit for short amounts of sickness or unemployment, the first 28 days are not covered and payments would need to be maintained during this time from savings.
Payments are made in arrears every month.
If the plan is in joint names then when you arrange the policy not only do you have to decide on the amount of cover but also the way you want hat cover to be split. You can have any percentage split that you like from a straight 50/50 to one that reflects either the different relative earnings between yourself and your partner or the degree of risk that a claim may need to be made. If you select a 50/50 split then if a claim s made for one party being unemployed then half the selected monthly benefit will be paid.
The cost of the plan depends upon what risks you choose to cover and also the amount of cover you require.
It is expressed as a cost per £100 of cover with any odd amount calculated as a pro rata payment. For accident sickness and unemployment it is £6.04 per £100 whilst for unemployment only it is £4.31 and sickness and accident £3.26. All of the cover has a 28 day excess to it.
Therefore to cover a mortgage payment of £500 per month for unemployment cover the cost would be 5 x £4.31 totally £21.55 per month.
Important Points to Remember
I mentioned at the start of my review the need to be able to satisfy the terms of the declaration and it is important that when you take out the policy that you are not aware of any imminent risks to your employment or health otherwise the plan will be invalid.
In the case of any claims for unemployment cover the plan must have been in force for at least 60 days before a claim can be made. If you take the plan out and then lose your job within 60 days then no benefit will be paid.
It is important that you calculate the amount of benefit that you require correctly. You can amend the amount of cover that you have and this is easy to do however if you increase your monthly protection for unemployment from £500 per month to £750 per month the 60 day period will apply to the additional £250 of cover you have selected. Therefore it is wise to ensure that you take out adequate cover at the outset and to also include in the cost of the Paymentcare premium itself as that has to be paid even while you are claiming.
If you stop paying the premiums the plan will lapse, it does not have a cash in value nor is a payment made in the event of death.
As I said at the start of my review this is the best insurance I have ever taken out as it has given me a certain amount of freedom to change career without having to use up my redundancy payment to do this. The plan has been flexible and I have been able to increase the amount of cover as my income has increased and also to increase it when my company was taken over as everyone could see that redundancies were likely however doing it over two years ago meant that I did not fall foul of the eligibility rules.
The benefit you receive is not treated as income so is tax free and does not have to be declared as such on any self assessment, further it does not restrict your eligibility to job seekers allowance (contribution based).
Making a clam is easy and hassle free. Upon becoming out of work one phone call gave me all of the advice that I needed, claim forms were sent out and these have to be completed on a monthly basis when I go to sign on and then sent to the Abbey. Each month my payment is made directly into my bank account and is timed to arrive a couple of days before my mortgage payment ensuring that my account does not go overdrawn.
In addition for those who are out of work you have free access to a website which provides valuable tools to help with your job search as well as an advisor who will make contact by phone and give constructive advice on the support available to you. I have checked out the website and found it very useful and comparable in quality to the one provided by the out placement consultancy my company paid for.
Like all insurances this is a policy designed to protect you financially in the event of a certain set of conditions and it will not be suitable for everyone however as a former employee of a bank which used to mean a job for life Im really glad that I took it out as within two months of claiming I had been repaid the previous seven years premiums that I had paid out.
Thanks for reading and rating my review. For full details of the policy check out
Time to get back to watching Trisha and playing on the x-box by myself. Surely you did not think !