Don’t pay extra for worthless insurance
THE DAILY EXPRESS - 14TH NOVEMBER 2007
Payment protection insurance is regularly sold alongside personal loans and is designed to cover repayments if you suffer long-term sickness or redundancy. Sounds sensible? Sadly, it is often worthless.
Payment protection insurance is expensive. Total repayments on a £10,000 loan at 6.8 per cent with Masterloan would cost you £11,780 over five years without insurance but £14,033 if you took out cover – a hefty £2,253 more.
Even worse, the small print on many payment protection insurance policies is riddled with exclusions, and around 85 per cent of claims are rejected, according to Citizens Advice.
Neil Thomas at adviser Simpsons says: “If you’re self-employed, for example, you won’t be able to claim the redundancy element.
“And policies routinely exclude back problems and depression, the two main reasons for workplace absence.”
Many lenders automatically include payment protection insurance when preparing your quote – adding up to 30 per cent to the cost of your loan.
Shockingly, an Office of Fair Trading investigation found some lenders suggested it was compulsory. Do not be fooled: it is not.
Tip: Say no to your lender’s payment protection insurance. If you want cover, you can often get better value from standalone insurers such as Britishinsurance.com.
