Income protection and protection insurance policies still under scrutiny
- 4TH NOVEMBER 2007
Since the investigation into the payment protection sector which comprises of loan payment protection, mortgage payment protection and income protection insurance began in 2005, faith in the products has somewhat been lost and with them still being under the watchful eye of both the Financial Services Authority (FSA) and the Competition Commission problems for the sector aren’t over.
While some changes for the better have been made it is clear that much more needs to be done as mis-selling of income protection is still happening despite recommendations by the FSA when it comes to selling the cover. The majority of policies that have been mis-sold have been down to a lack of information being given about the product at the time of selling, in particular no mention of the exclusions which can be found in all policies. Common exclusions include being retired, self-employed, suffering from a pre-existing medical condition or only being in part time work.
When taken out with the exclusions in mind then it can be a very worthwhile product to have in your corner if you should come out of work after suffering from an accident, through sickness or if you should have an accident. A policy would kick in and begin to payout once you had been out of work for a length of time which can be from 31 to 90 days and would then carry on paying out for between 12 and 24 months which in the majority of cases is more than enough time to get back on your feet and back to work.
Mis-selling occurs when the consumer buys the cover and hasn’t been given the facts regarding the policy; this means that they couldn’t make an informed decision regarding the suitability of the cover for their needs before buying. The biggest culprits were the high street lenders who sell the cover alongside other products such as loans, credit cards and mortgages for the big profits that are made through them each year, which run into billions of pounds. If you want a policy that comes with the essential information and key facts then you have to shop around and take the cover out independently with a specialist provider of payment protection such as ethical British Insurance.
British Insurance only sells payment protection products and as such can help you to make huge savings on income protection; they know it is imperative that the consumer gets the essential advice and access to the key facts so that they are able to make a more informed decision.
In March 2008 it is hoped that buying payment protection cover will become easier when the Financial Services Authority introduces comparison tables. The tables will show the consumer which product is most suitable for their needs after answering a series of questions relating to the products, it will also make the exclusions clear and also make determining the total cost of the cover easier than it has previously been. However while the tables will make the product more transparent it can’t make up for the expertise, cheap income protection and good advice from years’ of experience that a standalone specialist such as British Insurance can provide.
