Loan payment protection insurance can give you an income with which to continue meeting your monthly loan repayments each month if you were to find yourself out of work due to suffering from an accident, long term sickness or unemployment by way of involuntary redundancy. While it can be a safety net the cover isn’t suitable for all circumstances and if you want it to do the job it’s designed to do then you have to understand the product and the exclusions within a policy.
The exclusions within loan payment protection insurance are what can stop you from being able to claim on a policy and determines whether the cover is suitable for your circumstances. Some of the most typical exclusions are being in part time work, retired or having suffered from an illness within the last 2 years that is the reason for you being off work when you claim. You do have to check the key facts and small print of loan payment protection insurance policies as they can differ from provider to provider.
Once you have determined the suitability of loan payment protection insurance then it would begin to payout a tax free income once you have been out of work for a period of time stated at the onset of the policy which can be anything from 31 days to 90 days. Once the cover has kicked in then it would continue to give you an income for up to 12 months and with some providers for up to 24 months.
Loan payment protection insurance isn’t without complications and it has seen problems which were highlighted in 2005 after the Office of Fair Trading received a super complaint from the Citizens Advice and an investigation by the Financial Services Authority resulted in several high street lenders receiving fines for mis-selling policies. Currently in the hands of the Competition Commission who are conducting an in-depth inquiry into the sector which is expected to end in February 2009, the sector is still also under the eye of the FSA. The latest fines to be handed out have been personal fines to Chief Executives of firms after the latest round of investigations revealed that payment protection is still confusing to consumers, with the high street providers and banks not always making it easy to understand when selling.
For now stick with standalone providers for loan payment protection insurance to make sure you get the advice and information you need along with the cheapest premiums.