The Most Commonly Used Forms of Protection Insurance Cover

The latest quarterly Savings and Protection Survey (Q4 2009) from the Association of British Insurers (ABI) revealed the most commonly used forms of personal protection insurance in the UK. The data was collated over the previous six quarters from a sample of working respondents, which provides a more reliable gauge than just a single quarters worth of data. The most utilised forms of protection cover were as follows. Life Insurance (held by 47 percent of respondents) Life insurance is an extremely adaptable type of policy, paying out a (usually) tax-free lump sum upon death. Generally, there are two main reasons for holding life insurance: family protection and mortgage protection. Within family protection there are two distinctly different types of policies available, whole of life insurance (which is guaranteed to payout as the policy term is until death) and level term insurance (which provides life cover for a specified period of time). Life insurance is also commonly used for mortgage protection purposes. The two main types of mortgage life insurance available are level term insurance (used to protect an interest only loan) and decreasing term insurance (used for the protection of a repayment loan). Critical Illness Cover (held by 17 percent of respondents) Critical illness insurance is a very popular form of cover as it is used for personal protection, family protection and for mortgage protection. Critical illness cover will payout a tax-free lump sum to the policyholder upon the diagnosis of a critical illness specified in the policy. Mortgage Payment Protection Insurance (held by 16 percent of respondents) Mortgage Payment Protection Insurance (MPPI) has become an increasingly popular form of cover during these recent hard times. This type of policy will pay for mortgage repayments and associated home costs in the event of accident, sickness or unemployment. Private Medical Cover (held by 15 percent of respondents) With long waiting lists and a lack of funds in the public health service it is not surprising that individuals decide to hold their own personal medical cover. This type of policy will pay for medical treatment and consultations at private hospitals. If these tough times continue over the next few years it is likely that MPPI cover will increase in popularity as the risk of redundancy remains high. On the same note, it is likely that the proportion and number of people who have the disposable income to pay for private health insurance will decline.