You can find cheap loan protection insurance, but you have to go online to a company that sells it on its own. You can't buy it at the same time you borrow money. High street lenders often try to sell loan protection along with their so-called "cheap" loans for huge profits. This makes them a whopping GBP4 billion a year. When sold this way, customers are often not told much about the things that aren't covered, so they buy coverage they can't use.
Loan protection insurance is something you can get to protect yourself in case you lose your job in the future because of an accident, illness, or unemployment. If this is the case and you have big loan payments to make every month, you might have a hard time coming up with the cash.
As long as you read the policy's terms and conditions, the cover would give you a tax-free income after you have been out of work for a while. This time period can be anywhere between the 30th and 90th day, depending on the provider. Coverage would then last between 12 and 24 months, which is usually more than enough time for you to get back on your feet and back to work.
There are exceptions to all cheap loan protection insurance policies, which means you might not be able to make a claim. Some of them are the same for all policies, while others are set by the provider. People who work part-time, have a long-term illness, are old enough to retire, or are self-employed are often not eligible.
Checking the terms and conditions is important because that's where you'll find the exclusions, which can help you decide if the coverage is right for you, as well as the terms and conditions of the coverage. In 2005, Citizens Advice made a great complaint to the Office of Fair Trading about the wrong way loan protection was sold (OFT). After this, the Financial Services Authority started a probe that is still going on, and the OFT sent the sector to the Competition Commission.
Even though there have been some changes for the better in the way sales are done, there are still a lot more that need to be done. In March 2008, a comparison table will be put in place. It is hoped that this will make payment protection products more clear. The table will ask a series of questions, and based on how people answer, they will be able to figure out which of the payment protection products is best for them. Along with this, they will point out the things that aren't covered, making it easier for the customer to know if they can make a claim, and they will tell the customer how much the coverage will cost.
Cheap loan protection insurance is hard to find with a traditional lender, but a specialist in payment protection will have some of the lowest premiums for something that could save your life if you lost your job.
