Loan payment protection insurance
Loan Protection Insurance from British Insurance
Despite all the premiums paid in by policy holders, many claims under loan protection insurance cover are often rejected. How is it that so many claims come to be rejected by the insurer and how can you make sure that you can make your claim count? If you’re unfortunate to have to submit a claim, at the very least you should expect the insurance to pay out. The following are some pointers to help you make sure that, when you need it, your insurance claim is actually met.
Reasons for the rejection of claims
Sadly, the biggest single reason for the very high number of claims rejected by those holding loan protection insurance cover is that they were mis-sold the insurance in the first place. For example, if someone is aged over 65, they’re of retirement age and therefore clearly ineligible for the kind of insurance that pays out in the event of “involuntary unemployment”. Believe it or not, however, unsuspecting pensioners have nevertheless been sold loan protection insurance cover – only to discover that it’s quite worthless if ever they need to claim on the insurance.
Any self-respecting insurance provider, like the reputable independent providers who specialise in this type of insurance, therefore, will make clear to you from the outset whether or not you are eligible for loan protection insurance cover. This is likely to include the requirement that you are aged between 18 and 65; are continuously resident and working in the UK, Channel Isles or Isle of Man; and are currently working (without being on sick leave) and have been in employment for at least the past six months.
Exclusions
In the same way, reputable independent insurance providers will be just as upfront about the other terms and conditions of your loan protection insurance cover. This means frankly discussing with you any of the exclusions attached to the particular cover you are interested in buying. Clearly, you’re better off knowing all about these before you buy, rather than waiting until the moment you make a claim, only to find that those particular conditions are excluded.
Each policy will have exclusions specific to your own particular circumstances, and any insurance provider worth his salt will be able to take you through these carefully and explain anything on which you are unsure. Most policies, however, are likely to exclude claims for accident or sickness (i.e. incapacity) if the claim is being made as the result of:
-
any pre-existing medical condition. That is to say, any illness or condition which you had before taking out the loan protection insurance cover. Exceptions are likely to be made – and the claim allowed – however, if you’ve been free of any such condition for some years before your current incapacity;
-
any medical condition (physical or mental), which you knew about or should reasonably have known about before taking out the loan protection insurance cover;
-
injuries that have been self-inflicted or are the result of suicide or attempted suicide;
-
any medical condition (physical or mental) arising from an addiction to drugs or alcohol (unless treatment for a non-addictive condition has been prescribed by a doctor);
-
backache and associated complaints, however they might have been sustained, unless your doctor has diagnosed a particular medical condition;
-
any period during which you have been off work through an incapacity that has not been certified by your doctor.
If you’re making a claim for the unemployment benefits payable under loan payment protection insurance cover, most policies will exclude claims made if:
-
you had not been continuously employed for at least six months before the claimed period of involuntary unemployment began;
-
you have been given a notice of pending unemployment, or your last period of employment ended during the “deferred” or “exclusion” period (this, is the period commonly marking the start of loan protection insurance cover, during which you are unable to submit a claim. The period can be as short as 3-6 months, but can last for as long as 9 months);
-
you have been responsible for misconduct at work, which has led wholly or in part to your being dismissed;
-
the unemployment was effectively your own choice i.e. you resigned, made yourself voluntarily unemployed or accepted voluntary redundancy;
-
if you are self-employed, it is clearly more difficult to satisfy the insurer that you are genuinely unemployed and that your business is not simply going through quiet spell. If you are self-employed, therefore, most policies will need evidence that you have stopped trading altogether before a claim under the unemployment provisions of your loan protection insurance cover is granted.
The best way of making your claim count
When you have loan protection insurance cover, you want to be sure that it pays out when you think it should pay out. In the first place, this means ensuring that you’re buying from a source that has no vested interested in the loan you’re seeking to protect and will not therefore sell you a policy for which you’re ineligible. The best way of making sure that you’re buying from a provider entirely free from such interests, therefore, is to buy a completely standalone policy from an independent insurance provider.
The independent insurance provider will have no interest in mis-selling you an inappropriate product and will instead go out of his way to ensure that you understand and accept all of the terms, conditions and exclusions affecting the policy – before you buy it. It’s about an honesty, openness and frankness that is quite evidently absent from too many of the better-known high street providers.
Of course, you’ll never actually want to fall sick, be injured in an accident or become involuntarily unemployed. But if you buy from a reputable independent loan protection insurance cover provider, you’ll at least have the comfort of knowing that any claim you do need to make is almost certainly going to result in the pay out of all the benefits you were expecting.
