Loan payment protection can be a very useful thing to have if you work full time, meet the policy's requirements, and have monthly loan payments to make. However, the cover can be very expensive, and it can be hard to find cheap loan protection unless you buy it separately from a specialist provider.
A specialist can give you good products for the lowest premiums, and if you get cheap loan protection from them, you can save up to 80% compared to a traditional lender. The Loan protection can replace your lost income if you can't work because of an accident, illness, or being laid off. Policies start paying out after you've been out of work for a certain amount of time, which can be anywhere from 31 to 90 days. They pay out for up to 12 months, but some providers pay out for up to 24 months.
The money you get isn't taxed, and it will give you the money you need each month to keep making your loan payments and not go into debt. But you should make sure that a policy is right for you because some situations aren't covered. These "exclusions" can vary from policy to policy, but some of the most common ones are working part-time, having a long-term illness at the time you buy the policy, and being retired.
Since 2005, when the Office of Fair Trading found that policies were being sold wrongly to a large number of people, cheap loan protection has come under fire. The Financial Services Authority started looking into the sector. As a result, several big names on the high street were fined and told to make their products easier for customers to understand when they were sold. After the investigation, which is still going on, the sector was sent to the Competition Commission, which is doing a thorough review that should be done by February 2009.
The Financial Services Authority has said that, starting in March 2008, comparison tables will be used to give consumers more information when they buy a policy. This is one of the most recent changes that will help consumers.
The tables will make it easier for consumers to figure out which type of coverage is best for them based on a series of questions. The tables not only cover payment protection, but they also show that consumers should shop around for payment protection.
Payment protection specialists are currently one of the most affordable ways to get payment protection and get all the information you need to make sure you get a policy that fits your needs.
