subject: Loan Cover Can Work If You Understand What You Are Buying by:Simon Burgess [print this page] Providing you take the time to read the terms and conditions that come with a policy then loan cover can be a valuable asset. It is only when the consumer is ignorant of the exclusions and buys cover that has not been explained fully that problems occur. This was seen in 2005 when the Office of Fair Trading received a super complaint from the Citizens' Advice Bureau. Following this, the Financial Services Authority began investigating and subsequently handed out fines to several firms.
Guidelines were laid down when it came to improving sales techniques and while some firms took heed and have made changes to the way they sell cover, many more are still failing to meet expectations and mis-selling continues. The majority of mis-selling occurs when policies are sold alongside loans at the time of borrowing. High street lenders are thought to bring in around 4 billion in profits from adding cover to loans. Often when the protection is bought this way interest is added onto the loan after loan protection has been included, which means you are paying interest on the actual protection and loan combined and not just the borrowing itself.
For the cheapest quotes for payment protection insurance go to a specialist independent provider. As they are more ethical, the quote given for protection for your loan or credit card will be based on your age when applying and how much your monthly loan repayments are. By choosing to take out loan protection this way you can save as much as 80% when compared to high street lenders' quotes.
Along with making huge savings on the cover a specialist will also ensure that the consumer has access to the information needed to ensure the suitability of the protection. Policy exclusions stop some people from being eligible to claim, and so checking your circumstances against the exclusions is imperative. Failing to properly explain exclusions is the number one cause of mis-selling.
Popular exclusions include working part time, being self-employed, suffering from an ongoing illness or being of retirement age. While these are listed as exclusions even those who have an illness could still be eligible to take out a policy. Providing the illness has not re-occurred within two years before applying for the cover a policy might be suitable. Those who are self-employed would be eligible to claim if they ceased trading entirely through no fault of their own. With these exclusions and exceptions in mind, you can see why it is essential to go over the terms and conditions with a fine toothcomb.
A specialist is the best way to save and get the information related to all aspects of payment protection, of which loan cover is just one type of product. However, in March consumers will have another tool they can use: comparison tables. Tables will show how much a policy would cost in total, and explain the exclusions that exist in all cover. When it comes to choosing which type of policy would be the most suitable then this will be made more transparent through a series of questions and answers.
About the author
Simon Burgess is Managing Director of the award-winning British Insurance (http://www.britishinsurance.com), a specialist provider of low cost income payment protection insurance (PPI), mortgage payment protection insurance (MPPI) and loan payment protection insurance.
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