Archive for the ‘Loan Insurance’

Loan insurance could be an alien term to people who are not used to debt and even to those who have borrowed money on many occasions. Some people can even hold a policy without even realising it. Loan insurance is a financial insurance product which will help someone keep up with repayments if they lose their income through no fault of their own. It has attracted some negative publicity because some banks and lenders have sold policies ‘over the counter’, when providing people with money. However, the market is broader than many people think and great value deals are available which can protect someone if they fall on hard times.

This type of policy normally helps protect somebody if they end up without an income due to falling ill, suffering an injury after an accident, or if they are made involuntarily redundant.

Policies provide the claimant with a tax free sum on a monthly basis to help them pay back their debt until either they are back fit and in their own job or they are in new employment. Payments do not last forever and will often stop after a ceiling of 12 to 24 months is reached, depending on the insurer.

To qualify someone needs to be a full UK resident and will normally have to be over 18 years of age. They will need to have held down a regular job for around six months and can expect the first payment following a successful claim to arrive a month after approval. However, many companies will backdate pavements to the first day someone was without a job.

There are some important exceptions, for example someone will not be able to make a claim for a pre-existing medical condition which was diagnosed before they bought the insurance policy. Other common exclusions mean someone will not be able to make a successful claim if they accept an offer of redundancy from their employer or if they are simply sacked from a job.

Most basic policies involve a percentage of someone’s regular income being protected. For example, someone taking home £2,000 a month might expect £1,000 a month after a successful claim. Greater levels of cover are available from most insurers for higher premiums.

Loan insurance is a payment protection insurance product, and this area of the financial insurance market is still being looked at closely by the Competition Commission. The Financial Services Authority has already fined some big name high street providers for mis-selling policies to people who did not need them or who did not qualify because of their circumstances. Most of the attention focused on firms who sold their policies over the counter, and some more independent companies like the ethical British Insurance might be able to save someone a considerable sum of money on a standalone policy as opposed to one attached to a loan.

If you have taken out a personal loan recently, you will know only too well the hoops and hurdles you need to negotiate. You’ll need to prove your credit-worthiness and your credit history will be scrutinised with a fine-toothed comb. Past late payments and any credit you might have defaulted on, of course, will count against you and make it virtually impossible – in the present climate – to raise credit in the future. It is more important than ever, therefore, to ensure that any existing borrowing is adequately covered by loan insurance.

Loan insurance is a simple and straight forward way of ensuring that repayments on a loan continue to be made even when you are forced to take time off work (and thus risk losing the income from that employment) because of an accident or illness, or if you are made compulsorily redundant. Knowing that you can keep on top of the repayments during such times of financial difficulty gives the much-needed peace of mind not only that the current borrowing is well protected, but that your credit rating and the feasibility of raising credit in the future is also safely maintained.

Loan payment protection insurance – as it is more formally known – can be arranged to cover loans of most sizes. The amount of cover available will be related to the policy holder’s normal income and there is a typical maximum of 50% of that total income, or £1,000, whichever is the lower sum. These limits will vary from policy to policy, but are clearly designed to provide sufficient cover for most loans.

Once the insurance has been set up, it pays out automatically each month in the event of the policy holder being off work (through an accident, sickness or involuntary unemployment) for longer than an agreed “qualifying period” (typically 30 days, but can be as long as 90 days). Naturally, these benefit payments will stop as soon as the policy holder is able to return to work or find a new job, or after a maximum of 12 months (24 months in the case of some policies), since loan insurance is designed to afford short- to medium-term protection.

Loan payment protection insurance is one of the most rigorously inspected products in the financial services catalogue. Investigation after investigation has shown that the most reliable and price competitive markets for the purchase of this type of insurance is from independent, specialist providers of standalone insurance policies. Spokesman Simon Burgess, of one such provider, British Insurance, says: “with lenders paying such close attention to past credit histories before advancing any kind of loan these days, it is desperately important to maintain a near-perfect credit record. Current borrowers cannot afford to miss even one repayment, even if they have an accident, fall sick or become unemployed. Loan insurance, therefore, is an indispensable way of keeping covered”.

Loan insurance could provide security and peace of mind if you should lose your income. You might suffer from an accident or illness which meant you were unable to work. You could also become a victim of unemployment sometime in the future and have to find another job. During any of these events you would still have to find money to continue servicing your loan repayments each month and a policy could help you to do just that.
If you chose to search with an independent payment protection specialist such as British Insurance you could insure up to a certain amount of your repayment with them against these events and then claim this sum back as an income that would come to you tax free. The money would go towards your repayments each month for the duration of the policy which is set by the provider along with a deferment period.
British Insurance set the starting date from when you receive your benefits from 30 days after you are unable to work and there is no excess to stand to as they back pay on the cover to the first day you were made redundant or became incapacitated. You would have up to 24 months to make a recovery or find work and then the protection would expire. If you choose to search for other providers to compare the cost of loan insurance you will find that British Insurance offer protection for up to 80% cheaper and you must check the small print of other providers. Some might state that you have to wait for up to 90 days before putting in your claim. Other providers might payout for up to 12 months only but again you would have to find this out in the small print before taking out the cover.
When checking the terms and conditions of protection you would also have to check for exclusions as they differ with providers. While British Insurance put in just a few exclusions others might add in many more. British Insurance supply you with the information needed to determine if protection would be suitable on their website so you need to compare this information against your circumstances.
Loan insurance would help you to not only continue meeting your loan repayments and so keep you out of court but also keeps your credit rating in good order. The consequences you would have to face by missing payments would depend on the type of loan. Without cover if you could not find the money to continue meeting the demands of your repayments you could fall behind and your credit rating would be the first thing to be affected. It is important to keep your credit rating in good order as this is one of the main factors that are taken into account when you apply for credit of any kind. If yours is bad then you might be turned down or have to pay a higher rate of interest.

If you’ve actually been successful in obtaining a personal loan recently, it is a near certainty that you will have been struck by two things – apart from the high, post credit-crunch cost. The first is the importance of your credit rating, which will determine not only whether the application for the loan is approved, but also the rate of interest that will be attached to your particular loan. The second follows hot on the heels of any successful loan application and that is the insistence on the part of the lender that you take “loan insurance” to protect your repayments of the loan. Both elements – credit rating and the sales pitch for loan insurance – are closely related and underscore the importance of choosing your loan insurance carefully.

Loan insurance is more properly termed loan payment protection insurance – a clever but simple and straight forward product that makes sure that repayments due on a loan continue to be met even if the policy holder is off work because of an accident or sickness or has been made involuntarily unemployed. Clearly, none of us knows when an accident or illness might incapacitate us from working, while the spectre of unemployment seems to loom over more and more people as companies batten down the hatches in response to economic recession. Whether through incapacity or unemployment, therefore, there remains a very real risk of the borrower encountering temporary difficulties is repaying a personal loan he or she has struggled to secure.

That difficulty in maintaining the loan repayments, of course, can have serious and long-lasting consequences. Missed payments can lead to spiralling debts and a steadily worsening credit rating. This will make future applications for credit more difficult and more costly and unless steps are taken to bring those debts back under control county court judgments or even bankruptcy may beckon.

So, if loan insurance makes a good deal of sense in preventing the debts from accumulating during temporary periods of incapacity or unemployment, is there anything amiss in the lender’s attempted hard sell from the outset? Clearly, this kind of insurance is in the lender’s interest – since it ensures that loan repayments continue to be made – but isn’t it also doing a favour for the borrower, too?

The answer is yes only if the lender can be relied upon to sell an appropriate loan insurance policy at a competitive price – and more often than not, this has been shown to be far from the case. But if the lender cannot be relied upon for such a service, there remain a number of independent, specialist providers who will arrange entirely appropriate and competitively affordable loan insurance. Market leaders among such independent providers, British Insurance, for example, pride themselves on their utmost integrity in arranging only those policies that best suit their customer’s needs, at a fraction of the cost charged by many big-name lenders.

When taking out a loan over the last few years, you may have been asked by the lender whether or not you want to insure your ability to pay back the debt. Some people might have shook their heads and said ‘no thanks’ and others may have signed on the dotted line. Some people may even have agreed without fully understanding what they were signing up for. Loan insurance is offered by banks and other lenders to customers ‘across the counter’ in this way on a regular basis, but what the policy includes may not always be the best value.

To be sure of landing the best cover deal, it can make sense to shop around and check out more independent firms. They can also give information on what each policy entails and some can give a clearer picture than banks. Put simply loan insurance, also sometimes known as loan payment protection insurance, protects someone’s ability to keep up with the regular payments on a loan. It will normally cover unfortunate eventualities like redundancy, long-term illness and serious injury - essentially anything which means a person is left without their salary through no fault of their own.

Once a successful claim has been processed, a policy will then pay money tax-free into someone’s account until they are fully recovered or until a pre-agreed time limit expires. How much someone gets can vary depending on what level of cover they opt for - be it 50, 60 or 70 per cent of their earnings or more. This payout can prove vital in some circumstances - in some cases it can be the difference between comfortably keeping up with a mortgage and facing repossession.

Loan insurance, as part of the payment protection insurance industry, is technically a sector still being examined by the Competition Commission. The industry has already faced scrutiny from the Financial Services Authority, and some big names have actually been fined for selling policies to people who did not actually qualify for them because of their circumstances.

This has meant some people instead look to get cheaper protection from more individual companies like specialist payment protection provider British Insurance. The company’s managing director, Simon Burgess, says people can often save considerable sums on loan insurance by going with companies like his. He said: “It’s true the reputation of the payment protection insurance industry is not exactly whiter than white, but this doesn’t mean people should risk not having cover. Many of our policies are much cheaper than those offered by banks and other lenders, and we don’t scrimp on our cover either.”

Loan insurance can be taken out to insure up to a pre-agreed sum of your monthly loan repayment against the chance that sometime in the future you could fall ill or have an accident that meant you were unable to work. A policy would also cover the possibility that you could be made redundant. The sum you insured against when taking on the protection would be the income that you received back as a tax-free payment each month for the duration of the policy.

How long you would receive payments would depend on the provider you chose to take out the cover with. You can take loan payment protection with high street lenders but you will get protection much cheaper if you choose to buy it independently. High street lenders charge over the odds for the cover when selling it alongside their products and this brings them in around £5 billion in profits each year. Ethical payment protection specialist British Insurance provide you with protection that comes with no excess as it is dated back to day one from you losing your income. A claim can be put in from the 30th day and you would have 12 months of payments before the policy would cease. Other providers could give you 24 months but the terms and conditions must be read to find out, before you buy. They must also be checked to find out the deferment period as with some providers you could be waiting for as long as 90 days before claiming.

British Insurance also offers you savings of up to 80% on their loan insurance when compared with high street lenders. They also put in few exclusions and you can check these against your circumstances using the information they provide on their website. Once you have checked you can be sure that you could rely on the cover which would allow you concentrate on recovering or provides time to search for work. You would have to check the small print of any protection you were considering taking out with other providers, as some could add in many exclusions.

Loan insurance premiums with British Insurance are based on the amount you choose to protect of your repayment and your age. As the cover is based on age this means that the younger generation who often stretch their outgoings to the maximum can afford protection. It is essential that you are able to maintain the repayments of your borrowing as falling behind could lead to a court appearance if you cannot agree to pay off what you owe. Your credit rating would also be affected and if this happens you could find it hard to get approval for any type of credit in the future. If you were to get accepted you might have to pay over the odds for the interest rate.

Loan insurance would be there for you to provide you with an income if you became a victim of unemployment or if you were to lose your income through falling sick or being involved in an accident that prevented you from working for a while. You would be able to insure a pre-agreed amount of your monthly loan repayment and then claim this sum back in the event of you losing your income. This income would go a long way towards you keeping out of debt and not having the worry of how to meet your loan repayments.

Depending on the provider you chose to take out the cover with would influence the amount that you would have to pay for the premium. If you chose standalone payment protection insurance provider British Insurance you would make savings of as much as 40% on the cost of the premiums and be given a quality policy that is backed up with advice.

British Insurance would begin to provide you with an income after the 30th day after the event and they would also back pay on the protection to the first day from you becoming unemployed or from being incapacitated. Following the onset of the cover you would have a payment each month for a period of 12 months.

If you were to compare the cost of loan insurance with other providers then you would have to check out the terms and conditions of the insurance too as well as the premiums. Some providers might offer you protection that would continue providing an income for up to 24 months. You also need to check to ensure you know when the protection would begin paying out as some providers can state you must wait up to 90 days before making a claim.

There are also exclusions that would need to be checked against your circumstances in any loan insurance you consider taking out. Some providers might add in a lot of exclusions while others could add in just the most frequent exclusions. Once you have checked these and have ensured that protection would be suitable you can then have something to rely on.

Loan insurance can stop you from earning a bad credit rating. If you miss payments then this would be the first thing to be affected by debt. As this is what all lenders take into account you could find borrowing in the future to be next to impossible and even if you do manage to obtain credit you might find that the interest rate would be high. If you did take on a secured loan and got behind into debt with the repayments then you would be at risk of losing the property to repossession.

Loan insurance could help you to repay your loan commitments if you lost your income due to accident, sickness or unemployment. You would be able to insure a pre-agreed amount of the payment you make and this would be the sum of money paid back through the provider as a tax-free income. You would be able to use this money to continue servicing your repayments each month for the period of time specified in the policy’s terms and conditions.

If British Insurance is your choice of payment protection provider then the benefit would commence from the 30th day after the event. They would back pay on the protection to the first day that you became unemployed or incapacitated and you would receive an income each month you were unemployed or unable to work for up to a maximum of 12 months. After this period of time the policy would just stop. Some providers state in their terms that they would payout for a period of up to 24 months so when shopping around and comparing policies you would have to check the small print. Some providers could also extend the day when you are able to claim to as long as the 90th day so again you would need to check the conditions of the policy to find this out before taking it on.

You would also need to check  loan insurance policies for the exclusions that are added into the cover as all providers will add in at least the most common exclusions, as do ethical standalone provider British Insurance. They always ensure that the consumer is aware of the exclusions and that they are provided with the information needed to check the exclusions against their lifestyle. It is only be doing so that you can be sure that loan payment protection would be suitable.

Loan insurance can make a great deal of difference to your lifestyle if you do lose your income. Without a policy you would have to struggle to keep financing the loan repayments. If you were to fall into debt and not be able to catch up then at the very least you would have your credit rating affected. If the loan was secured on your home then you would be risking repossession by the lender and debts from unsecured loans could also mean you would be taken to Court. You could also be risking losing your possessions if the judge sends bailiffs to your home to recover what you owe through your possessions. All of this can be avoided by paying a small sum each month for cover.

If you have loan repayments to keep up with then you should consider taking out loan insurance. By covering your repayments for a pre-agreed sum you would then get this income back as a tax-free amount each month if you lost your income. A loss of income could come about as the result of you suffering an accident, an illness or if you should become unemployed.

The money you received back towards your loan repayments would go a long way towards you being able to keep out of debt. If you have taken out a secured loan and miss payments through a loss of income you would be at risk of losing your home. Even unsecured loan debts could see you having to go to Court. In all cases where you get behind in debt you would see your credit rating affected. Your credit rating is what all lenders take a look at when they are deciding whether to give you credit or not. If you have a bad rating then it is highly likely you will be turned down for a loan.

By paying a small premium each month to an independent provider you can avoid all the stress that missed payments would cause. If you shop around independently to buy loan insurance you can save as much as 80% if you take a look at the cover that British Insurance offers. Their premiums are based on how old you are when you take out the cover and the amount you wish to protect. Age based protection means that the younger generation who often need help the most can now afford to cover their repayments.

A loan insurance policy with ethical British Insurance would begin to provide you with an income after you had been unemployed or unable to work for a period of 30 days. They would back pay on the protection to day one of you becoming unemployed or of being incapacitated and then they would continue to provide you with an income for as long as 12 months if you needed to claim for that long. There are some payment protection providers that might payout for up to 24 months and you would have to check the small print as some might ask that you wait for up to 90 days before you would be able to put in your claim. You would also have to check the small print on loan insurance for the exclusions. It is essential that you check these against your circumstances and British Insurance supplies this information.

If you check the cost of  loan insurance with a specialist payment protection provider such as British Insurance you will find the quotes for the cover are up to 80% cheaper than when taking out the insurance with the lender on the high street. When taking out a loan or credit card you would need to check to see if the lender has included it into the loan without you being aware of the fact, although they should ask you if you want cover.

Loan payment protection taken out for a small premium each month allows you to be able to protect up to a certain amount of your repayments each month for loans. You would choose how much cover you wanted to take and this is the sum that you would receive back as a tax-free payment. This sum could then be used towards paying your loan/credit card commitments and this would stop you from falling into debt with the payments.

Loan insurance is usually offered when taking out a loan or a credit card, the high street lenders fail to tell you that you are able to protect your borrowings independently. This is due to the fact that they bring in roughly £4 billion in profits from selling protection alongside the loans, mortgages and credit cards they sell. In some cases it has been known for the lender to work out the cost of protection over the term of the loan and then add it into the loan before adding in the interest. When this happens the cheap loan can almost be doubled. Another fault with buying protection in with the loan is that often little information is given when they add in the cover.

British Insurance sells loan insurance that would start to provide the policyholder with an income after the 30th day of their unemployment or incapacity and they would backdate it to day one of you becoming unemployed or incapacitated. Following commencement of the cover it would then continue to payout up to the 12th month if it was necessary. There are some providers that could extend the cover up to as much as the 24th month and others might ask that you defer from making a claim for as long as the 90th day. You would have to check exclusions to ensure that you would be able to make a claim on the cover. There are some to be found in all polices and you need to check these against your lifestyle if you are to be sure that you would be able to put in a claim on the protection.