Loan cover can be a valuable asset if you should come out of work due to an accident, sickness or through unemployment (the cover is also known as ASU insurance). However, there have been problems relating to the cover since the investigation by the Financial Services Authority began recently and the sector is still under investigation, so it is essential that you are aware of what the product can and cannot do.
When taken out with your circumstances in mind loan cover can give you a tax free income which would begin to payout once you had been out of work for a certain length of time which can be anywhere between the 31st day and the 90th day. The cover would then continue to provide you with an income which would allow you to continue paying your loan repayments and avoid getting into debt. You would receive a payout for up to 12 months and some providers will extend this to 24 months which gives you more than enough time to get back on your feet again.
While some changes for the better have been seen since the FSA`s investigation into the loan cover and payment protection sector – fines were handed out after the latest investigation by way of mystery shoppers – there is still a long way to go yet. One of the biggest problems is the lack of information given regarding the product such as the exclusions and how much the cover would cost over the lifetime of the loan. The Financial Services Authority some well known financial organisations are going to receive personal fines if they continue not to have the consumer’s best interests at heart.
For now the safest way to buy loan cover is with a standalone provider of loan cover. Not only will you get some of the cheapest premiums but also the information you need to make sure that a policy is suitable for your needs.