Do you understand the ins and outs of loan protection?
- 12TH SEPTEMBER 2007
Providing you understand the ins and outs of a loan protection policy then it could make the difference between struggling to keep meeting your loan repayments if you should find yourself out of work or having peace of mind that you would have money if the worst should happen.
Loan protection can be a very valuable product to have in your corner if through accident, sickness or unemployment you find yourself out of work for 30 days or more. If this were to happen and you met the requirements outlined in a policy then you would receive a tax free income each month for up to 12 months in the majority of cases, although with some providers this can last for up to 24 months. Cover can be taken out to guard against accident and sickness only, unemployment only or for all three and is sometimes known as ASU insurance.
While it can be an excellent product when sold and purchased correctly there has been any problems surrounding it. When bought online alongside a loan the protection was mis-sold to many by the use of pre ticked boxes, the consumer was unaware that the tick in the box meant they wanted the cover and that if the didn’t want it they had to un-tick the box. Fortunately the majority of lenders have now agreed to change the way that the protection is sold like this online after the recent investigation by the Financial Services Authority.
The Financial Services Authority began its investigation after a super complaint by the Citizens Advice to the Office of Fair Trading in 2005. The investigation showed that high street lenders were guilty of wide spread mis-selling and several fines were handed out then the sector was referred to the Competition Commission who began conducting an in depth review into the sector which is set to reach its conclusion in February 2009.
With the sector still under investigation and review it is essential that you stick with a specialist payment protection provider for your loan protection. A specialist such as standalone provider British Insurance will ensure that you have access to the key facts and vital information needed for you to ensure that loan payment protection is the right product for your circumstances.
