Yes, the title is right. Even though the Financial Services Authority (FSA) has been looking into the sector since 2005 and has set up rules, payment protection insurance (PPI) is still being sold wrongly. In 2007, over 4,000 cases were looked into. Worst of all, though, is that this number is twice as high as it was a year ago, which does nothing to restore people's faith in the products. This is sad because loan protection can be a very valuable product if it is sold well.
Many people forget what the real problem is and blame things like loan protection for not doing what they are supposed to do. But the people who sell the cover without having the right training are to blame, not the cover itself. It can work if you buy it from an independent specialist and do it right. A policy that works depends on people having access to the key facts. Exclusions are what keep people from being able to make a claim, and common ones include being retired, having a pre-existing illness, or only working part time. There are likely to be more, but you can only find out about them if you read the fine print.
Loan payment protection insurance can give you a tax-free monthly income if you can't work because of an accident, illness, or being laid off. Most policies start paying out between the 31st and 90th day of being continuously out of work. Coverage would then keep giving you a tax-free income for another 12 to 24 months, depending on the company. Again, read the key facts to figure out how the policy works.
Loan payment protection insurance will give you the money you need to keep making your monthly loan payments without having to worry about where the money is coming from. It will also keep you from falling behind on your payments or worse, going into debt. Even though there are problems in the sector as a whole, if you go to a standalone specialist provider for the cover, you can be sure to get a good product backed by experience and honest advice. You will not only get the important information you need to make an informed decision about the exclusions, but you will also get a policy with the lowest possible premiums.
If you want the peace of mind that loan protection can bring you have to read the small print of any policy you are considering taking out and never be tempted to take the cover that is offered at the time of taking out the loan. When getting a loan, you should always make sure that the cost of the cover has not been added to the cost of the loan. Some greedy lenders will do this without the customer knowing.
