Loan payment insurance can do what it's meant to do, and it can do it well, as long as you make sure that your situation is right for a policy before you buy one. You have to know what the product is and how it works before you buy it. You also have to read the fine print of the policy to make sure that the exclusions that are in every policy won't stop you from making a claim.
After making sure it's a good product, you can get a quote for loan payment protection insurance from a company that specialises in it. In the past, buying insurance from a separate company has always been the cheapest option. Taking out insurance from a high-street lender along with a loan can add hundreds to the cost, when it doesn't have to. The specialist will give you the cheapest quotes and the advice you need to make sure you know what you are buying, if it fits your needs, and how much the coverage will cost in total.
You can get loan payment protection insurance if you want to protect your loan payments in case you lose your job, get sick, or have an accident and can't pay what you owe each month. If you don't pay back your loans on time, you'll end up in debt and get a bad credit score that could take years to fix. Loan protection could give you a monthly income that isn't taxed, so you can make your monthly payments without worrying. Policies usually start paying out between the 31st and 90th day of being out of work and continue for 12 to 24 months. Most of the time, this is more than enough time to get back on your feet and back to work.
In the past, though, payment protection has been criticised and gotten a bad name. However, it's important to remember that it's not the products themselves that are to blame, but the bad sales techniques of lenders who have never sold payment protection products before. In 2005, the Citizens Advice made a super complaint that brought problems to the attention of the Office of Fair Trading. The Financial Services Authority started an investigation and fined some of the biggest names on the high street for selling the cover wrongly with loans and mortgages.
During a recent review, it was found that, while some changes had been made, many companies were still not making their policies clear enough when they sold them. This meant that customers were still confused about what they were buying, how much the coverage cost in total, and what the exclusions in a policy meant.
When it comes out in March 2008, a comparison table will make this easier. It will help the customer decide which policy is best for their needs. It will also tell them how much it will cost and what the exclusions are. This should make buying insurance much easier than it is now. If you want your loan payment protection insurance to work as it should, you should stick with an independent specialist who knows the business and can give you the information you need as well as the cheapest quotes for the cover.
