The good and the bad of loan payment protection
- 7TH OCTOBER 2007
Just as with anything you buy there are both good and bad sides to loan payment protection and you have to weigh them both up before purchasing a policy if you expect the cover to work the way its designed to do.
Loan payment protection is taken out for a premium each month which is based on your age at the time of taking out the policy and the amount that you wish to cover each month. Loan payment protection insurance would begin to give you a tax free income to cover your loan repayments once you have been out of work for a certain period of time which can be anything between the 31st day of being out of work to the 90th day depending on the provider. If you take out the cover with specialist payment protection provider British Insurance then cover will start from the 31st day of being out of work and will then continue for up to 12 months.
Simon Burgess who is Managing Director of British Insurance is always warning the consumer about the exclusions and possibility that the loan payment protection cover might not be suitable for your needs, unlike the high street lender who fails to give adequate information to ensure that the product is suitable. Some of the most common exclusions include only working part time, being retired, self-employed or suffering from an illness at the time of taking out the policy.
Simon explains: “It was the lack of information that started the investigation into the sector in 2005 when a super complaint was made to the Office of Fair Trading by the Citizens Advice and the Financial Services Authority began an investigation which led to several high street lenders receiving fines for mis-selling payment protection policies. Currently in the hands of the Competition Commission who are conducting an in-depth inquiry into the sector which is to be completed in February 2009, the payment protection insurance industry is still suffering from the lack of information being given to consumers regarding the product. It is satisfying that the Financial Services Authority are now handing out fines to the Chief Executives themselves for failing to adhere to their recommendations.”
There are both good and bad sides to loan payment protection but providing you stick with a standalone specialist such as British Insurance you will understand the product and are able to make an informed decision regarding the policy’s suitability.
