Loan Protection Quote from British Insurance
A loan protection quote is an insurance quote that lays out the benefits, terms and rates for loan payment protection insurance. Quotes are especially easy to obtain in the current insurance environment because of the access to online insurance providers. This easily accessible nature of payment insurance has not always existed. Only recently have consumers begun to have more control over payment insurance.
Loan payment protection insurance is a short-term insurance product that pays benefits over a 12 to 24 month period (depending on the individual policy terms and conditions, which do vary among providers). A tax free monthly sum is paid to an insured person who has become unable work due to involuntary redundancy, accident, or illness. Its purpose is to help the displaced worker keep up with debt obligations during their period of temporary job loss. Along with providing for loan cover, loan payment protection often offers a provision to support basic expenses with a modest income supplement. Loan payment insurance is often sold in combination with loan products. This packaging has come under scrutiny because of some mis-selling techniques used by banks and High Street lenders. In fact, these institutions had much control over the payment protection industry until recently.
A loan protection quote offers benefit and rate information specific to loan payment insurance. Loan payment cover is actually just one of the three common insurance protections sold under the payment protection umbrella. Mortgage payment insurance and income payment protection insurance are the other key covers. Each type offers the same core benefits and protects the same conditions. However, there are some modest distinctions in purpose and features of the various plans.
Mortgage payment protection insurance, similar to loan payment protection is often sold in combination by mortgage lenders. Obtain a mortgage insurance quote is as convenient as a loan protection quote. Mortgage payment insurance is designed to help the covered person meet monthly mortgage payment obligations during periods of brief unemployment. The payouts do not cover the entire lost income, but they do help meet the most crucial obligation that homeowners have. Many homes have been saved by the financial assistance provided by mortgage payment cover.
The third payment insurance product is income payment protection insurance. This is very similar to the other two, but its protection is simply to offset lost job income. Again, it does not replace the full monthly income, but payments cover a significant portion of what has been lost. This income payment cover helps the insured provided for basic monthly necessities and covers common expenses.
There is some confusion in the market between income payment cover and income protection. Income protection is a longer-term insurance with higher premiums that pays benefits due to incapacity up to retirement on some occasions. The confusion stems largely from names used synonymously among the products. The key for consumers is to remember that income payment protection insurance is part of the short-term payment cover portfolio of products.
In 2005, the Citizen’s Advice submitted a super complaint to the Office of Fair Trading (OFT) on behalf of consumers it felt were getting a bad deal in the payment cover market. The complaint alleged mis-selling by some banks and High Street lenders during the packaging of loans and insurance products. High pressure tactics, it alleged, are commonly used to manipulate borrowers to buy insurance believing it is required to obtain the desired loan.
More deceptively, some lenders were charged with packaging premiums into loan repayment costs without asking the borrower and without providing a loan protection quote. The lender would simply make note of the insurance in the fine print of disclosures. This tactic enables the lender to spread the high cost of their premiums over the length of the loan, making it more deceptive to borrowers. Consumers do not even notice the high amount they are paying for the payment cover because it does not show up as prominently in monthly payments. Some sellers have even sold plans to retired people, part time employees, and people with preexisting medical conditions, all of whom cannot receive benefits from the plans.
As a result of the complaint, the OFT and the Financial Services Authority (FSA) investigated the payment insurance industry. The FSA fined and sanctioned several institutions it felt used mis-selling tactics. This has helped reduce some of the practices by banks and High Street lenders. Sadly, some online lenders have been taking up some of the deceptive packaging techniques. The OFT appointed the Competition Commission to perform more research and they are waiting on the results, due in 2009, to take further action.
Consumers have already benefited greatly from the public scrutiny of selling tactics. Consumers that were previously unaware of payment cover are now more educated. They are also familiar with independent providers who offer a choice to insurance customers. Consumers are more cautious about reading the details of loans, in some instances, to protect against being trapped into high priced protection. They are also more inclined to get a loan protection quote before buying.
Standalone products are typically offered at rates 40 to 80 per cent lower than those available from banks and High Street lenders. Additionally, independent insurance providers do maintain a strong reputation for integrity and customer service. Independent providers maintain relationships with the best insurance providers, which allow them to give consumers the best insurance covers at the best rates available. Most independent
Standalone providers are extremely convenient. Obtaining a fast, accurate, and low cost loan protection quote, mortgage protection quote, or income payment protection quote requires little effort by the consumer. Independent providers work quickly to offer selected products and rates. Consumers need to provide for their own temporary needs as the State has more or less pulled itself out of any responsibility for unemployment support, providing little, if any financial assistance, to those who truly need it. Homeowners seem to be recognising this as about 60 per cent of new home buyers are acquiring protection. This is a significant boost from the one in three homeowners who are currently protected by payment insurance cover.
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