Loan Payment Protection Insurance Explained

While you are in work meeting any loan repayments is just par for the course. You borrow and repay without any problems this would apply also to borrowings made on credit cards. As the majority of people readily turn to credit as a way of getting by each month to pay bills and take well deserved breaks this often amounts to a large sum that has to be paid back each month. If you were to lose that income you rely on for the repayments where would you get the money to be able to keep your head above water? One way would be if you had taken out loan payment protection insurance.

Falling behind on the repayments of loans/credit cards can have several consequences. The first would be that as soon as you miss a payment your credit rating is affected. You would be marked as a bad payer and this would mean that if you apply for loan in the future you might not get approval. Your payment history is the first thing that all lenders take into account. They check this and then say yes or no to your credit application. If you are a bad payer then you might be lucky enough to get approval but you might have to pay over the odds for the interest rate which means the loan would be very expensive. In the worst case if you are unable to keep up with your loan repayments the lender could take you to court. If the loan was secured against your home then this would mean that you are at risk of losing your home if the lender chooses to repossess. If you cannot catch up on the loan and the missed payments the repossession is very likely. An unsecured loan debt could see the lender taking you to court and the judge ordering bailiffs to come into your home and take your possessions to sell to get back what you owe.

Loan Payment Protection Insurance From Burgesses

Loan payment protection insurance for just a small premium each month would put a stop to any of these worries as you would be able to pay your repayment as normal if you lost your own income. You are able to take out protection against accident sickness and unemployment which is caused by no fault of your own such as if you are made redundant. While you can take a policy out with the high street lender when you take out a loan or credit card this is usually one of the dearest options. High street lenders have also been known in the past to add in cover without the consumer being aware of what they are taking on. In some cases lenders have added the protection in with the loan and the worked out the interest, in cases such as this it has boosted up the cost of the borrowing by almost half again. It is estimated that lenders on the high street make around £4 billion in profits by tagging their costly protection onto the cheap loan.

Loan Payment Protection Insurance

Not only do they charge way over the odds for loan payment protection insurance but they have also mis-sold policies due to not giving out adequate information and ensuring that the consumer was able to claim on the cover. In 2005 the Citizens Advice made a complaint to the Office of Fair Trading (OFT). Investigations ensued by both the OFT the Financial Services Authority which resulted in fines being handed out to many well known and trusted high street names. These were some of the names that had been around for years and who consumers trusted. The mis-selling ranged from selling loan payment protection insurance to those in self-employment, who were retired or who were not in full time employment. All of these situations mean that the consumer cannot claim as they are in the exclusions to be found in all payment protection policies. It was a lack of information that led to their downfall. If consumers are given information regarding the exclusions they are able to check for themselves before taking out the cover for suitability against their circumstances.

A standalone payment protection provider will give this information on their website and providing those considering taking a policy checks them, they can have a back up plan on which to fall if they become unemployed or incapacitated as a result of accident or sickness.

Applying online with an independent payment protection provider is easy and also means that consumers get the cheapest possible protection for their loans and credit repayments. The premium would be based solely on your age when applying for the protection and the amount that you wanted to protect of your loan or credit card repayments. All payment protection specialists would allow you to insure up to a certain amount of the payment each month so check this in the small print. This is the amount that you would receive back if you had to put in a claim after becoming unemployed of suffering accident or sickness. As the policy is age based the younger generation can afford to protect their borrowings whereas in the past this was impossible due to the high cost of protection and them having pushed their outgoings almost to the limit. The premium would not go up with age so taking out the policy when younger is to your advantage.

All loan payment protection insurance would begin to pay out after a certain length of time of you being unemployed or of you being incapacitated. Usually providers would ask that you wait between 30 days and as much as the 90th day before putting in your claim. Some providers might state in their terms and conditions that the benefit would be backdate to day one of your unemployment or incapacity so check this too before taking out the cover. Once you have started to receive your income it would then payout for either 12 monthly payment or 24 monthly payments, again dependent on the actual provider. Taking out loan payment protection insurance is a far more reliable back up plan than relying on savings or being able eligible to claim from the State for a loss of income.