Loan protection is still not being explained properly
- 9TH OCTOBER 2007
If you want loan protection to work then you have to be able to understand a policy and the exclusions which are in them. However you can only do this if you are given the information and despite the intervention of the Financial Services Authority since 2005, it has been revealed that mis-selling is still ongoing to some extent.
Some consumers still aren’t being told how much the total cost of the loan protection cover would be over the period of the loan or given the information they need to ensure that a policy would be suitable for their circumstances. A standalone provider on the other hand such as British Insurance, will make sure that you are given the information you need in plain English which enables you to make a decision on the product’s suitability.
Simon Burgess from British Insurance says that the consumer needs to be made aware that the product has exclusions, as with all insurance. Some of the usual exclusions include if you are only in part time work, suffer from an illness at the time of taking out a policy, or are retired.
The cover can stop you from getting behind on your loan repayments and getting into debt if you should find yourself out of work.Providing that you have understood the product and what it is and is not capable of then loan protection can give you a tax free income should you become unable to work due to long term illness, accident or redundancy. Once you have been out of work for between 31 and 90 days the loan protection insurance can continue paying out for up to 12-24 months.
Loan protection isn’t always explained properly so its is essential that you stick with the standalone and more ethical provider for your policy if you want to be sure that the cover would be suitable for your circumstances.
