Payment Protection Insurance - Otherwise known as Income Protection Insurance. Similar in many ways to Mortgage Protection Insurance, this is a more flexible cover that can be used for any number of purposes. The main differences between the two types of policy are outlined below :-
Mortgage protection insurance benefits are paid directly to the lender i.e. the building society or bank that granted the mortgage, whereas payment protection benefits are payable directly to you.

Payment protection benefits can be used for any purpose. They can be used to pay mortgage payments, but the premiums for mortgage protection insurance are cheaper.

Mortgage protection insurance can cover 100% of your mortgage payments up to a maximum of 65% of your normal income. Payment protection can cover up to 75% of your income.

Mortgage protection insurance gives 3 months free cover on every new policy, and the premiums are slightly less than for payment protection insurance. It is not unusual for a customer to take out both types of policy, one to cover mortgage payments, the other to pay loans etc and to provide living expenses in the event of a claim.