Archive for March, 2008

The younger you are, the less likely you are to fall sick and the less time you therefore need to take off work through illness. The younger you are, the less time it is likely to take you to find an alternative job if the one you’re in makes you compulsorily redundant. Taken together, these two factors make the younger person a far more attractive insurance risk to income protection insurers. This relative attraction is therefore reflected in the premiums charged for some kinds of income payment protection insurance.

With an age-related income payment protection plan arranged by a specialist insurer, British Insurance, for example, the premium you’ll pay if you’re in your early 20s is a good deal less than half the premium that someone in their 50s would be paying – and if you’re lucky enough to be in that younger age-group, premiums will start at just a few pounds for every £100 of income protected.

Even better news, perhaps, is that once you’ve started, the premiums don’t increase simply because you’re getting older. The rate at which you’ll be paying is determined at the time you start your income protection plan. So, over the years, the amount you can save by having started younger is even more attractive.

Indeed, it’s only really your age (and the amount you want covered, of course) that determines what you’ll need to pay for the income protection insurance premiums. Things like your gender, or your occupation, or even such lifestyle habits as whether you choose to smoke do not come into the assessment.

In all other respects, an age-related income protection plan is identical to any non-age related plan. It doesn’t have to be tied in with a loan or a mortgage. It’s a completely standalone arrangement that you’ve made to protect your income – and everything that goes with it – against those unexpected events that keep you off work because you’re sick, recovering from an accident or been made involuntarily redundant.

As with any form of income payment protection insurance, you simply need to choose from the outset the amount of income you want to cover (up to the insurer’s quoted maximum limits) and this will set the monthly benefits to which you are entitled under the policy, together with the monthly premium you’ll need to pay. These benefits become payable if you are off work for the minimum number of days set out in the policy documents and, depending on the particular package you choose, may even be backdated to the first day you were off work or made unemployed. With a policy from British Insurance, the monthly benefits provided by your income protection insurance cover would then continue to be paid until you were again fit for work or found alternative employment, or for a maximum of 12 months, whichever comes first.

Anyone can be forgiven for getting a little confused when it comes to income protection. It’s a short-hand term that used for at least two quite different insurance products.

Income payment protection insurance

On the one hand, we have income protection that is achieved through income payment protection insurance. By this means, you pay a small monthly premium to ensure that you have a replacement income if you are unable to work because you are off sick, need to recover from injuries sustained in an accident, or become involuntarily unemployed. Generally, you are able to cover a given proportion of your normal, gross income, but benefits under the policy are limited to a maximum period agreed at the start of the cover. Typical periods of cover are 12 or 24 months.

So, there are variations in the type of income payment protection insurance available. To illustrate a typical product, available from one of the market leaders in this type of protection, British Insurance can arrange an income protection package that will provide monthly benefits for up to 12 months, for a premium starting as low as a few pounds for each £100 of income to be covered. You can insure a replacement income of up to a maximum of £1,000 a month or 65% of your normal, gross monthly income, whichever is the smaller figure.

With this type of income protection, therefore, you are assured of a replacement monthly income whether you are incapacitated from working (through sickness or injury) or whether you are unemployed via involuntary redundancy.

Income protection insurance

Some people take the view that, with benefits limited to a maximum of one or two years, income payment protection insurance does not offer sufficient cover in the event of their suffering from a longer-term illness or incapacity. For them, the choice might be an income protection insurance that provides cover for an extended number of years, until the policy’s full-term, and typically until the policy holder reaches retirement age. Given the extended cover of income protection insurance, the premiums generally tend to be higher than for income payment protection insurance.

Whilst it is true that this type of income protection will ensure a replacement income for however long you are incapacitated from working, it offers no cover and therefore no replacement income if you become unemployed. It offers sickness and injury benefit only.

Furthermore, because of the longer-term risks associated with this kind of income protection insurance, insurers will take a much closer interest in the applicant’s age, medical history, smoking habits, gender and occupation (concerns that are generally less relevant when it comes to the shorter-term income payment protection insurance).

In the last couple of years, since the super complaint was launched by the Citizens Advice Bureau to the Office of Fair Trading, there has been a considerable amount of publicity surrounding loan protection insurance, which has earned interest from financial regulators and other Government appointed organisations.

However, sold correctly, loan protection insurance can provide invaluable security. The concept behind this type of insurance policy is to protect a borrowers loan repayments in the event that he or she is unable to pay back the personal or secured borrowing should they fall ill or suffer from a previously unknown disability or sickness and are unable to work; or, they become involuntarily redundant. The product is worth considering seriously, as nobody can be certain of what is around the corner, should their personal circumstances change. Loan protection insurance is designed to offer assurance to consumers that should the worst happen, they will be covered to continue making their monthly repayments.

As with all things in life, there are both plus points and negatives points to such products. For example, taking out loan protection insurance from some lenders can cost nearly as much as the borrowing itself. Over the last few years’, there has been a large amount of coverage in the media relating to the mis-selling of payment protection insurance to consumers.

Some criticism of this insurance lingered on the terms and conditions of some policies being restrictive and often rendering the policy invalid.
Complaints made to lenders as well as the financial regulator the Financial Services Authority (FSA) claimed that the loan quotation automatically included payment protection insurance despite the product not being compulsory. When considering loan payment protection insurance it is worth shopping around to get several quotes, especially from independent protection providers. Also, ensure that the terms and conditions of the policy are understood, as well as any exclusions that are noted.

Simon Burgess, managing director of specialist independent loan protection provider, British Insurance, says that the PPI mis-selling scandal “dwarfs the endowment debacle”. He adds that reports from consumers and regulating bodies tell us that payment protection insurance profits are massive and customers are not always receiving good quality products. “Therefore,” concludes Simon: “companies should not be affronted if they are inundated with compensation claims.”

Loan protection insurance is taken out by customers who have a loan and want the peace of mind knowing that their monthly repayments for the mortgage are at least partially covered if the worst scenario should happen and they become unable to work due to illness, accident or redundancy. The norm for a loan payment protection insurance policy is that the cover will pay out for up to twelve to twenty-four months depending on the individual policy terms and provide you with a tax free income every month to help meet your loan repayments.

If you are considering taking out a loan protection loan protection insurance that you do not have to purchase the insurance policy from the same company that has provided you with the loan. If you want the cheapest loan protection insurance then it is imperative that you shop around the independent providers. As recent investigations have shown, if you take the loan protection insurance from the original loan provider, it more often than not means that you will be paying far more for the cover than you need to be.

Recently it has come to light that some policyholders have been mis-sold their loan payment protection insurance policies, with many people owning policies that become invalid if they try to claim on them. The main culprits have been recognised as major brand high street banks and lenders; the Financial Services Authority (FSA) fined several well know names earlier in 2007 for their poor sales practices and the sector is currently under review by the Competition Commission.

Simon Burgess, Managing Director of independent loan protection insurer British Insurance, believes the investigating Competition Commission will not allow lenders to continue to reap their profits at the expense of the customer. “The time of major brand lenders selling only their own payment protection insurance products could well be finished”, says Simon and concludes: “Until the lenders are forced to work in the interests of consumers, I urge loan holders to shop around for their loan protection insurance cover and take advantage of providers who offer quality products with noticably cheaper premiums.”

Loan protection insurance is an insurance policy that can be taken out alongside borrowing such as a loan or credit card. It protects the customer in the event of becoming unable to work usually through accident, unemployment via involuntary redundancy or sickness, typically for around twelve to twenty-four months after the event.

However, in February 2007, the Office of Fair Trading referred their investigations of the payment protection insurance (PPI) industry to the Competition Commission, following a series of consumer complaints.

The Office of Fair Trading (OFT) said at the time of the referral that it had taken into consideration more than twenty responses from trade companies and businesses and remained of the view that concerns that had been earlier identified remained valid and warranted an investigation. Amongst the investigations were complaints that some of the loan providers were automatically including the loan protection insurance in the quotation without the customer knowing.

Simon Burgess, Managing Director of specialist protection insurance provider British Insurance, has commented that customers generally display a poor understanding of the product, its price and the details of their cover, and that equally poor training is given to the providers who are selling the insurance cover.

Simon commented that many personal loans never run for their full period – many get paid off early or reconsolidated - but if consumers take a single premium protection insurance policy in order to protect a five-year loan and then reconsolidate after a couple of years, they will have paid out to cover a loan that no longer exists.

He adds that: “The fact that the Financial Services Authority are investigating is minimal, saying that customers with the ‘nil refund’ exclusion in their contract can obtain a premium refund if they cancel the policy and have not claimed or if they now wish to repay the loan early. But no boundries have been confirmed as to the level of refunds consumers can expect, and providers could keep a high majority of the premiums without being fined by the Financial Services Authority.”

Mr. Burgess’s suggests that all potential buyers of loan protection insurance look at their personal circumstances; any other similar insurances and savings they may have, before deciding they need loan protection insurance. He says: “If you do buy it, be clear about what it covers, and doesn’t cover. Shop around to see if you can get the insurance more cheaply elsewhere. Check what you will get back if you cancel the policy or repay the loan early.”

Taking out loan protection insurance can give a sense of financial relief, as it provides a monthly lump sum that is tax-free if you were to lose your income. You can take out cover to safeguard against unemployment by way of involuntary redundancy or being unable to work due to suffering illness or accident. Normally, you would have to wait for a period - typically 30 to 90 days after the first day you are off work - before claiming. However, some providers backdate cover to the first day of your claim.

Loan payment protection insurance is often taken out at the same time as borrowing with the high street lender. However, in the majority of cases, this can add hundreds of pounds more onto the cost of the loan than it need. Payment cover can be taken for up to 80% less with independent specialist provider, British Insurance.

Loan protection when taken out with your circumstances in mind would begin to provide you with the income needed to keep maintaining your loan or credit card repayments. This of course would bring enormous peace of mind, as getting behind on your loan and credit card payments would mean you would earn a bad credit rating as well as be liable for extra interest charges and fees for missed payments. A bad credit rating would affect your chances of getting credit in the future. Even if you did, you would probably have to pay a higher rate of interest.

Once the policy has begun paying out it would then provide the income for between 12 months and 24, depending on the individual terms and conditions of the policy. This is usually more than enough time to get back on your feet and back to work or to find another position.

When shopping around for loan protection insurance, you do have to compare not only the cost but also the terms and conditions because these can vary greatly between providers, with some polcieis offering greater benefits than others.

Loan protection is taken out by those who work full time and who fear that they would not be able to continue meeting the commitment of the borrowing if they lost their income. A loss of income can be due to being off work because of an accident or illness; or through becoming unemployed due involuntary redundancy.

If you wish to protect yourself against the unexpected then loan payment protection insurance can be the solution, so start by looking around for the cheapest quotes. Loan protection will often be offered at the time of taking out the borrowing but, historically, this is the most expensive way to buy the protection. You can get a policy much cheaper if you shop around for it with standalone providers. For example, a loan payment protection policy from independent provider British Insurance would offer a quote that can save you up to 80% in comparison to the high street lender.

However, there are more reasons for choosing to go with an independent provider than the savings. One is the valuable information that is made available before taking on the policy. This information should be read before buying as it can tell you if a policy would benefit you or whether you may not be eligible to claim due to exclusions. Frequently found ones include being in part-time employment, if you are retired, self-employed or suffering an illness which is considered to be ongoing. Others can be included by the provider themselves so checking the conditions is essential.

Loan protection would begin providing the policyholder with an income that is tax-free after a period of being unable to work or of being unemployed continually. This will depend on the provider but will be somewhere between 30 and 90 days after the event. You can get a policy that would be backdated to the first day of the claim and British Insurance is one of the providers that offer this.

The cover will run for up to 12 – 24 months, again depending on the policy terms and conditions.

Taking out loan cover might seem like an additional expense but it can be well worth it. While no one likes to think that they could suffer from an illness or accident or consider they might be unable to work, it does happen. There are many downfalls to not being able to continue servicing your loan. At the very least, you would get a bad credit rating. This would mean that you would find it very hard to be able to obtain credit in the future. A bad credit rating can take many years to mend and even if you were able to borrow, the interest rate would be higher than for someone who had an excellent one. In the worst case, if you had taken out a secured loan you would be at risk of losing the roof over your head by failing to keep up the repayments.

When looking for the best loan protection deal, always ensure you compare not only the cost of the cover but also the conditions that come with the policy. Just as the premiums differ, so do the terms and conditions.

Loan protection insurance is still misunderstood by the majority of people. This leaves many consumers not bothering to protect their loan and credit card repayments, therefore leaving themselves financially vulnerable if they find themselves having lost their income.

Loan payment protection insurance often sold at the time of taking out the borrowing, often at a high cost. In some cases, cover is even added on to the amount borrowed and then interest is added on top. This of course boosts up the cost of the borrowing considerably. High street lenders do this recoup ‘lost’ profits when they offer a cheap loan. It is reported that they make up to around £4 billion each year in profits from the sales of the cover. However often very little information is given when the cover is sold and this has caused problems in the past with mis-selling.

The mis-selling of payment protection insurance (PPI) was highlighted in 2005 when the Office of Fair Trading (OFT) received a super complaint from the Citizens’ Advice. Both the Office of Fair Trading investigated the sector as did the Financial Services Authority (FSA) who handed out fines to many well-known names on the high street for failings when it came to sales processes. While the FSA continues to watch over the sector, the industry is also in the hands of the Competition Commission. The Competition Commission are conducting an in-depth review, which will reach its conclusion in February 2009.

However, despite all the negativity surrounding loan protection insurance, it can be a very valuable product when it is taken out independently from an ethical standalone provider. One such provider, British Insurance, offer all the information needed to be able to make an informed decision regarding the suitability of the cover, meaning you get cover that suits your requirements, and at a low cost too.

When shopping around for loan insurance, do check out the exclusions. These, along with the information regarding when the policy benefits will start and finish, can be found in the terms and conditions of the cover and must be compared along with the cost of the policy. Some of the most frequently found conditions include having been in full time employment for the past 6 months before taking on a policy. Typically, you must also reside in the United Kingdom, the Isle of Man or the Channel Islands. If you have an ongoing illness, you must not have suffered from it within 2 years prior to applying for the cover. Others can be added by the provider.

All loan insurance policies state a waiting period before you can claim and this is the period of time that you have to be unemployed of declared unfit for work. In the majority of cases, this would be between the 30th and 90th day after the event. Once the policy has started to provide the policyholder with an income, it would continue to do so for between 12 months and 24 months. Providers can backdate their cover to the first day you become unemployed or found you were unable to work.

Loan protection cover is valuable due to the peace of mind it gives with the security of a tax-free income. A policy would allow you to repay your commitments whilst at the same time leaving you to concentrate on recovering or to look for another job. A policy can vary when it comes to how much you would pay. High street lenders are the dearest while independent providers offer cheaper quotes. British Insurance offers a quality policy that can save you up to 80% in comparison to the high street lenders.

The cost of loan protection does vary considerably with, historically, the dearest quotes being offered by the high street lender and at the cheaper end of the scale, the standalone specialist providers. British Insurance is one of the most ethical providers who offer cover for as much as 80% less than the high street lenders. As British Insurance only sells payment protection insurance, they know and understand their products inside out. This means they are able to back up what they sell with years’ of experience and policies that are sold by professional staff.

They have earned themselves the nickname of the “good-guys” in the sector and it is not hard to see why. Not only do they help the consumer to make huge savings but they also ensure that they present all the information regarding their loan payment protection to the consumer before they buy.

Loan payment insurance would begin to provide an income upon the policyholder being declared unfit for work or if due to involuntary redundancy. A policy would begin from between day 31 and 90 after the first day of the claim and would then continue paying out for between 12 months and 24 months. Some providers such as British Insurance backdate their cover to the first day of losing your job or of being unfit for work.

Reading the key facts or the terms and conditions before taking on a policy is essential. There are general exclusions that can be found in all loan protection insurance policies, but these do vary among the providers, so it is important to check out the terms and conditions of each policy you are considering.

A lack of information led to mis-selling in 2005 when both the Office of Fair Trading (OFT) and Financial Services Authority (FSA) began an investigation in to the sector following a super complaint from the Citizens Advice. This revealed that mis-selling was widespread and several well-known high street names were handed fines due to engaging what can only be described as ‘sloppy’ sales practices.

The Financial Services Authority then set out guidelines for those selling protection insurance policies to follow. Some firms have followed these recommendations and changes for the better have been seen, particularly when it comes to the way loan protection is sold online alongside a loan.
Another improvement to be seen is the planned introduction of comparison tables by the FSA. The tables will highlight the exclusions in the cover and make the consumer aware of how much a policy could cost. They will also set out a series of questions that will lead the consumer to choosing which type of protection would be best suit them.
It is important to not only check the cost of loan protection, but also to compare when the policy would kick in and when it would end. In addition, this is where you would find mention of the exclusions. When comparing the cover you should look at it overall because while the cost does vary greatly from provider to provider, so do the benefits on offer.

A loan protection policy can give great peace of mind by giving the policyholder an income each month that is tax-free if they should find themselves without an income due to involuntary redundancy; accident or sickness.

However, you do need to shop around for loan protection in order to get the best deal possible and by getting quotes from independent, specialist providers, you will be able to find a policy suitable for your requirements. Getting several quotes, which you can then compare, is essential. However, you need to compare more than just the cost of the cover. You also have to check and compare the terms and conditions as these include the exclusions, which can usually be found in all policies.

The cost of loan payment protection insurance does vary even among independent providers. Among the cheapest quotes are those given by standalone specialists British Insurance. They offer loan payment protection for up to 80% less than the high street lender. Along with this, they provide all the key information needed to for the consumer to be able to make an informed decision regarding suitability.

There is always a period of time that the policyholder would have to wait before making a claim. Usually this is between day 30 and 90 of being unable to work or of being unemployed. Once the policy has commenced it would continue to provide a tax free income for between 12 and 24 months. British Insurance would backdate their policy to the first day of the claim, but not all providers do, so you have to check.
Loan payment protection is a valuable tool when it comes to keeping your credit rating in good stead. If you cannot afford to keep up with your loan repayments then you would earn a bad credit rating at the very least. If you had secured your home on the loan then you are at risk of losing a lot more - the roof over your head.

In 2005, the Office of Fair Trading received a super complaint from the Citizens Advice as to the widespread mis-selling of payment protection insurance (PPI). Many consumers had bought cover that they were unable to claim upon and others were being charged for protection that they not even aware that they had.

There followed an investigation by the Office of Fair Trading (OFT) and the Financial Services Authority (FSA). The Financial Services Authority subsequently handed out fines to several well-known high street lenders before the OFT referred the sector to the Competition Commission. Mis-selling was found to be widespread and the Financial Services Authority made recommendations when it came to selling the cover. While some firms followed these, others failed to acknowledge them.

Comparison tables that are to be introduced by the FSA will hopefully shed some light on what is often a confusing product and make it easier to buy. Loan protection and the related payment protection policies will be easier to choose by way of questions and answers; this will lead consumers to being able to tell which type of cover would be the most useful. The tables will also highlight how much a policy could cost and what exclusions can be found in the cover.