Loan payment protection cover is one of a family of protection policies taken to insure against a loss of income. In this case, a policy would ensure you had the money needed each month to continue meeting your loan and credit card repayments. A policy would payout if the policyholder should become unemployed or if they had an accident or illness that kept them from working.
The cost of cover varies depending on where you choose to take it. While the easiest option might seem to be taking the policy the high street lender offers, usually this is the most expensive protection. High street lenders often charge high premiums that can almost double the cost of borrowing. Independent providers will offer quotes that can be substantially lower.
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Another big difference between high street lenders and independent providers is the amount of information given. In order to make sure that you get the policy you need you have to be given the key facts. The key facts hold vital information such as any exclusions and the policies starting day and ending. Independent providers give information on all aspects of payment protection cover. They do this by offering FAQs and articles with the technical jargon explained. When considering buying cover this information is imperative.
Usually loan payment protection cover would start between day 30 and 90 of continually being unemployed or unable to work. It would then continue providing peace of mind and an income for between 12 and 24 months. You also have to check to see if the policy would be backdated to day one, some providers offer this and some do not. Comparing the cost is essential as it can differ between providers, as can the terms and conditions. The key facts should be compared with the cost as these contain important information regarding the policy and the exclusions that can apply.
Many individuals are failing to protect their repayments due to a lack of faith in payment protection insurance products. Problems began for the sector in 2005 when it was announced by the Office of Fair Trading that mis-selling appeared to be widespread. This was brought to their attention by the Citizens Advice. Mis-selling ranged from adding cover onto the cost of the loan to failing to give adequate information. Following this the Financial Services Authority handed out fines to well known names on the high street.
While many changes for the better have been seen, more are in the pipeline with the introduction by the Financial Services Authority of tables that allows comparison. Loan payment protection cover is just one form of protection that can be taken out to cover unemployment and being unfit for work. It is hoped that with the introduction of the tables buying a policy and understanding the cover will become easier.
They will highlight the terms and conditions including exclusions and tell the consumer how much a policy would cost. Along with this, it will help them to choose the right policy. This will be made possible through a series of questions and answers. While loan payment protection cover would provide a tax-free sum each month, there are other policies that could be more suitable for your needs. Always ensure you understand what you are buying and you can have peace of mind and security of an income.
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