A loan insurance plan can be bought cheaper
- 11TH DECEMBER 2007
If you want to take out a loan insurance plan then you should avoid taking it out alongside the loan from the high street provider and instead choose to buy your cover from a standalone provider. Loan insurance can be invaluable to have, providing you have made sure the exclusions are checked against your circumstances before you buy the cover.
A loan insurance plan is bought in case you should find yourself unable to work in the future in due to accident, sickness or should you be made unemployed by way of redundancy. If the product is suited to you circumstances then it would give you an income once you have been out of work for a period of time defined by the provider. In the case of specialists in payment protection British Insurance, the cover would begin from the 31st day of being out of work and would then continue for as long as 12 months. Some providers ask that you are out of work for 90 days, so do check out the terms and conditions.
A loan insurance plan can work but you have to check the small print of a policy. Mis-selling of the cover was brought to light in 2005 when the Financial Services Authority (FSA) began investigating and handed out fines to several names on the high street. Following this the sector was referred to the Competition Commission who is conducting an in-depth inquiry into the sector which is expected to reach conclusion in February 2009.
Problems with the products related to bad selling practices and it is important to realise it is not the actual products themselves which have been at fault but those selling them poorly. A specialist such as British Insurance gives you the information you need to determine if a loan insurance plan would be suitable for your needs before you buy.
