Why Loan Payment Protection Insurance
Loan payment protection insurance is the broadest cover in a portfolio of insurance products known as payment protection insurance (PPI). Loan protection insurance provides a tax free sum for people who become displaced from work due to involuntary redundancy, extended illness, or accident. Loan payment assists through monthly instilments over a benefit payout period which will be anything from 12 to 24 months. For many people who have loan commitments to meet, loan protection insurance cover can help them meet their debts without financial worry or stress.
Loan insurance does not typically replace one hundred per cent of normal monthly income for the insured person, but it does cover a very significant portion – up to the providers set limits of course. The purpose of loan cover is to help Brits faced with growing loan debt and credit card debt to meet their monthly loan obligations. Maintaining their credit rating and keeping up with secured loans are important during periods of lost job income or when they are recuperating from an accident or illness.
Loan payment insurance is often sold in combination with loan products by many High Street lenders and banks, which has actually led to some common mis-selling practices. This has, however, brought to light the advantages of buying payment protection on the open market through an independent provider, such as the ethical British Insurance.
They can offer loan payment protection insurance at up to 80% less than the policies on the High Street, often with additional benefits such as the cover being back dated to the first day or unemployment or incapacity.
Their cost savings and comprehensive cover is also available with the other products in the p[payment protection insurance portfolio. There are two other common types of payment insurance that, along with loan payment protection insurance, make up the payment protection umbrella. Each of the three standard protections offer the same core benefits and cover the same events, but their purposes and features are a bit different. The idea behind these plans is to offer people a chance to secure their finances during periods of prolonged unemployment in lieu of little or no State support.
The second type of payment cover, mortgage payment protection insurance, is very similar in nature to the loan insurance. However, the mortgage payment protection is primarily designed to help homeowners meet their most important debt obligation. Homeowners that fail to meet mortgage obligations risk repossession of their property by the lender. Mortgage payment cover does not replace the entire lost income, but it does help many people hold onto their homes when they might otherwise lose them. As with the loan payment protection insurance, mortgage insurance is routinely sold in combination with mortgage products by lenders, often at a very high cost. Cue, independent provider British Insurance.
The third product of the payment cover portfolio is income payment protection insurance. This payment plan is simply intended to offset a sizable portion of the lost income. It does not replace the full income, but it does help sustain many people while they deal with illness, injury, or the job search process. Again, the core benefits and covered events of income payment are similar to the other types of protection.
Consumers have long been unfamiliar and unknowledgeable about the loan cover and payment insurance industry because banks and High Street lenders have controlled the industry. These institutions have often pressured or deceived consumers into taking on their expensive premium products. Some lenders pressure borrowers into believing they have to buy payment protection to secure their desired loan. Others simply build the insurance premiums into the loan repayment to hide the expensive premiums. By doing this, they can spread the costs over time so they are less detectable to the borrower. Borrowers often pay thousands in premiums over time, without even realizing they are protected. Consumers need to read the fine print of disclosure documents.
Another mis-selling tactic employed by some sellers has been the selling of payment insurance to retired people, part time employees, and people with preexisting medical conditions. All these groups are in most cases ineligible to receive benefit payouts based on plan exclusions.
Leading consumer advocate group, Citizen’s Advice, brought the aforementioned mis-selling practices before the Office of Fair Trading (OFT) recently through a super complaint. The complaint alleged that these selling tactics hindered fair competition in the payment insurance marketplace. As a result the OFT and Financial Services Authority (FSA) conducted investigations. The FSA concluded its investigation by imposing fines and sanctions on institutions it felt had used unfair selling. The OFT appointed the Competition Commission to further review the industry and is awaiting the report on its findings which are due in early 2009
The big benefit to consumers of the industry attention is that more people are aware of what they need to look out for as well as consider when buying loan insurance. The advantages of buying loan protection and mortgage protection on the open market through an independent insurance specialist like payment protection provider British Insurance have been strongly publicised in the media.
With a reputation for ethical business practices and award winning protection insurance products, British insurance is a good choice when choosing loan insurance as well as other payment protection insurance cover.
Obtaining a loan protection quote, mortgage protection quote, or income payment protection quote is simple and cover costs just from a few pounds for every £100-worth of cover required. With the low cost opportunities presented by standalone providers, there is no reason to avoid protection for oneself and his or her family.
Loan payment protection insurance can help someone who has lost their income through no fault of their own continue to meet their monthly repayment commitments, hassle free, leaving them to focus on getting a new job or recovering from illness.
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