Have you considered loan payment protection? If you have then you should also consider who you are going to take your cover with. Taking it with the high street lender could mean that you pay way over the odds for the policy and if you choose to search and compare with the independent provider you can make huge savings on your cover. A policy is taken out by those who have the commitment of a loan with repayments to maintain to insure that if they become unemployed or incapacitated they would have an income towards servicing their repayments.

When taking out loan payment protection you can choose the amount of the repayment you make each month to your lender that you want to protect. This sum of money would be pre-agreed by the provider as all with set a limit to the amount you can protect. The agreed amount is then paid back to you monthly for up to the term if needed as tax free payments. You would generally have to wait for a period of between 30 and 90 days before seeing any money and your benefit could continue for either 12 months or 24. Once the term had been reached, providing you had to claim that long, the cover would cease.

Bear in mind that were you to have to wait up to 90 days before claiming then you could already be in arrears with your loan repayments by this time of 3 months. While lenders are lenient and will give you time to repay payment arrears you would still have broken the contract of your loan and therefore be at risk of being taken to court. If you have a secured loan then of course your home could be at risk by breaching the repayment terms of your loan. You would also have to weigh up the fact that you could have found work or recovered within a period of 12 months and a policy paying out over 24 months would cost more than one paying over 12 months. However the benefit would cease once it had reached its term regardless of whether you had found work or recovered and got back to work.

You have another choice to make when you apply for your policy and that is the events that you want to protect against. You could take an all in one policy that would protect against unemployment and incapacity together. However should you just want to insure your loan repayments against redundancy alone then you can or you could just take out cover for incapacity alone. Some providers will give you carer cover in your protection so if a loved one were to become incapacitated you would be able to make a claim on your payment protection and care for them.

With loan payment protection behind you there would be no need for you to make a claim to the State for an income to help you to continue servicing your repayments. State benefits might fall short of the income you are used to bringing home which could mean you would not have enough money to maintain your essential outgoings which of course would include your loan repayments. If you risked using savings you could also be let down as they could deplete before you had got back to work or have found work.

If you have taken out a loan then you probably already know about loan payment protection. You could already have it included with your loan but if you have taken it with the lender then you could be paying way over the odds for it. If you are considering taking out a loan then you should be aware of the fact that you can choose to shop around and take your policy independently with a specialist provider. By choosing this option you can save a great deal on the cost of the policy and have more control over such as how much you want to protect each month and the events you want to cover.

The amount you choose to cover when taking out loan payment protection is the amount you get back each month and the payments are tax free. However all providers will set a limit to the amount you can insure up to so this should be checked, this amount would go towards setting the premiums you pay. You would have to wait for a period of time of being unemployed or incapacitated before you can make a claim on the insurance and this would depend on your provider. Some providers will offer to payout on your cover once the 30th day has passed while with others it could be up to the 90th day before you can claim. You should be able to check the terms in the small print and also check how long you would benefit from your cover as some providers offer 12 months of payments and others could offer 24 monthly payments.

When comparing the cost of the cover this is important as you should be comparing like for like. For instance a policy that would continue to payout for 24 months would cost a great deal more than one paying out for 12 months. 12 months of cover can be more time than is needed for you to have found work or for you to have recovered and being able to get back to your own job. However weigh up the fact that the cover would cease at this time regardless of your circumstances when the term has been reached.

You can choose to take out protection to cover both unemployment and incapacity together in which case you would be able to make a claim on your cover if you were to suffer from either of these events. If you just want to protect against incapacity alone then you would be eligible to claim if you suffered an accident or an illness that meant you were unable to work. Should you want security against redundancy alone then you could just take this out as a standalone policy. With loan payment protection behind you to fall back onto you would have peace of mind that if the unknown were to happen you would have financial security behind you to help you to maintain your repayments and stop you from falling into debt. Without it you could have a struggle on your hands to be able to meet these outgoings and have to face the consequences.

Where would you take out loan payment protection if you had the choice? Would you take it in with the loan at the time of borrowing and pay interest on the protection and the amount you borrow? Or would you take it with an independent payment protection provider and make savings of as much as 80% on the protection and pay monthly premiums for the insurance?

If you choose to shop around for your loan payment protection then you can choose how much of your loan repayment you want to protect. The amount chosen would be agreed by your payment protection provider and it is the amount that you would be given back each month if you had to make a claim due to one of the events you had chosen to protect. The payments would be tax free and you would receive them once you had been made redundant or incapacitated for a period of between 30 days and 90. Once you have started to receive them they would last for either 12 months or 24 months and then they cease. Some providers will also offer to date back your cover to the first day of you becoming redundant or incapacitated so this would need to be checked before you take out the protection.

With the benefit from your policy behind you, you would not have to worry about finding the whole repayment each month as you would have a substantial sum towards being able to maintain your repayment. If you had nothing to fall back onto then life could become very difficult and this could hinder your search for work or recovery. However even when considering making the most drastic of cutbacks you might still be unable to find the money needed to meet the demands of your loan repayments each month.

If you were to become unable to meet your loan repayment demands then of course consequences need to be faced and these would depend on the type of loan you had taken on. If you had secured the loan on your home you are at risk of losing it by falling behind on your repayments. Should you fall into debt with unsecured loan debt you could still be taken to court so the lender can try to get back the money you owe. This could mean your belongings could be taken so the lender can get their money back.

You would be able to choose the level of loan payment protection insurance needed. While you might want cover for unemployment and incapacity together you do not have to cover both events. You could just choose to take out unemployment protection if this suited your lifestyle better. You could also take protection solely to protect against incapacity if this suited your lifestyle better. The level of insurance chosen would go towards how much you pay for the insurance as would your age when you apply for protection and the amount of your loan repayment you choose to protect.

Loan payment protection secures your repayments if you should lose your income as the result of suffering from an illness or an accident. It would also do the same if you were unlucky enough to become a statistic of unemployment through redundancy. If you choose to take out cover with an independent provider you could tailor the amount you cover and choose the level of protection.

A standalone specialist provider would base the premium on the above and your age when applying. They would need to pre-agree with your chosen amount as all will set a limit as to the amount you can insure. The insured amount is what you get back each month, if needed, as an income that is tax free once you have been unemployed or incapacitated for the period of time stated in their terms. This could be anywhere between the 30th and the 90th day of redundancy or from you being incapacitated. Some providers will also date back the income to the first day that you became a victim of redundancy or from you being incapacitated so it is worth checking this before taking out the protection. Once the policy has begun to provide you with an income it would continue to do so for between 12 and 24 months and then ceases regardless.

With loan payment protection behind you and the income to fall back onto if you should lose your own, there would be less chance of you falling behind on the repayments. If you should fall back and be unable to catch up on the missed payments then consequences would need to be faced. These of course would depend on the type of loan you had taken out. A secured loan would of course be secured on your home which means it would be at risk of being taken by the lender. Unsecured missed payments could also lead to the lender taking you to court and bailiffs could come into your home to seize your belongings so the lender could get their money back. Of course whatever type of loan you have fallen back on you would see your credit rating being affected. As this is needed if you wish to borrow again in the future, you could find your application for any type of credit denied.

When taking your loan payment protection plan you could also tailor the policy to suit your needs. While you can choose to protect against unemployment and incapacity together your circumstances might mean you do not need to cover both events. If for example you get a good sick pay plan from your employer you might just need to cover against the possibility of incapacity alone. However you could also choose to take protection just for redundancy alone if this suited your needs better. Whichever type of policy you choose you would have to ensure that you would be eligible to claim. For instance if you are self-employed then protection might not be suitable. The same could apply if you suffered an ongoing illness or if you were of retirement age. A good standalone provider will always provide the information needed for you to check suitability.

Loan payment protection is taken by the policyholder to ensure that if you suffer an accident, fall sick or are made redundant you would have something towards maintaining your repayments. Often individuals do not realise that they have options when it comes to them taking out loan protection insurance. Usually the first they have heard about loan protection is at the time of taking out the loan with the lender. This is due to the fact that the lender will want to add in cover for the loan as they make around £4 billion in profits from selling protection this way. However you can choose to take out loan protection at any time with an independent payment protection provider.

When you choose the independent provider as a way to cover your loan repayments you can choose the amount of your loan that you want to cover. This amount is pre-agreed by the provider and is the sum of money that you would receive back as tax free payments if you were to become a victim to one of the events you had chosen to insure against. You would have to wait for a deferment period before making a claim on the insurance and this would usually be for either 30 or 90 days depending on the terms offered by the provider. Some providers will offer to backdate the loan protection insurance to the first day that you became unemployed or incapacitated so this would have to be checked in the small print before buying. Following the onset of the cover you then have a fixed time in which to receive payments and this would either be 12 months or 24 months. After this period of time the protection would cease paying out. However it could be more than enough time for you to have found work or for you to have made a recovery and got back to your own job.

The second choice you would have to make would be the level of protection needed. You could choose to protect against the possibility of unemployment and incapacity together. However your circumstances might mean you do not need protection for both events. In this case you could choose either to safeguard against the possibility of suffering from incapacity alone or you could take protection for unemployment alone. This will go towards determining how much the premiums would be as would your age and the amount of your repayment you choose to cover. Loan protection insurance taken with the independent provider can save you up to 80% on the premiums. With the protection to fall back onto there would be less chance of you falling behind on your repayments. Missed payments could mean the lender taking you to court and in the case of a secured loan it could mean you losing it to repossession if you cannot catch up on what is owed.

Loan payment protection can do a great deal for you if you were to become a victim of redundancy or incapacity. It could be enough to stop you from falling behind on your repayments and have your credit rating affected by the missed repayments. The protection could stop you from losing your home if you had secured the loan on it. It could also stop you from gaining a County Court Judgement due to missed payments which would affect your credit file.

When it comes to taking out loan payment protection you could choose to take the protection out with a standalone payment protection provider or take the protection that is offered by the lender. If you choose to take cover independently then you could decide how much of your loan repayment you want to protect. The amount chosen is pre-agreed by the provider and would be the amount that you receive back if you should have to make a claim due to one of the events insured against. The income would be paid to you each month as a tax free sum once you had been unable to work or had been made redundant for between 30 and 90 days. After a successful claim you then continue to receive a payment each month for between 12 months and 24 months depending on your chosen provider. Once the term of the policy has reached its end the protection stops paying out. However this could be more than enough time for you to have recovered from incapacity or it would allow you the time needed to have searched for work.

With loan payment protection behind you it would lessen the worry of falling behind on your repayments. It could stop you from having to make a great deal of changes to your lifestyle in order to try and find the much needed money each month. If you choose to cover your loan repayments with a standalone provider you could make savings of up to as much as 80% when compared with the lender on the high street. The lender will usually try to get you to take the protection they offer, however when doing so you will usually be paying interest on the protection along with the amount you borrow. Lenders will also calculate the protection over the entire term of the loan so this means you are paying in advance for cover. This means that if you were lucky enough to be able to pay off the loan earlier than its term you would have paid for protection you do not need. With an independent provider you pay a monthly premium and as long as you keep paying the premiums you would be eligible to claim.
Should you pay off the loan you simply cancel the insurance.

Loan payment protection could keep you out of court if you lost your income due to unemployment or incapacity. If you fall victim to either of these events you could find yourself unable to continue to meet the demands of your repayments. If this happened and you were unable to make an agreement to repay what you owe the lender could take you to court and you could lose your belongings if a judge sends in the bailiffs. Your credit rating would also be affected by missed or late payments and you could find borrowing in the future almost impossible.

You could take out loan payment protection by choosing the amount of the loan repayment you have to make each month and insuring this amount. The provider would pre-agree with this amount and it would the sum of income you received back, tax free, if you were to have to put in a claim. The income would be paid back to you each month for a period of either 12 months or 24 months depending on the provider in question. Of course you would need to stand to so many days before being able to claim on the insurance and this differs too and would fall in the region of between 30 and 90 days.

During this time you would be able to concentrate on recovering from your accident or illness or search around and find a suitable job. However after the term of the policy has reached its end it would simply cease paying out regardless of whether you had found work or recovered.

When you take out the loan the lender will ask if you want loan cover in with the borrowing. However if you were to take this option you would usually be paying well over the cost of cover with an independent provider. With an independent provider you would also have more choice over the protection. The high street lender adds in cover with the amount you borrow which means that you will be paying interest of the protection as well as the borrowing. They would also calculate it over the total term of the loan which means you could lose out if you were to repay the loan earlier than you had anticipated. With an independent provider you would be able to stop the monthly premiums if you should pay up the loan early.

In some cases loan payment protection insurance has been included with the borrowing without the consumer even realising what they had taken on. An investigation by the Financial Services Authority led to fines being handed out and the Competition Commission conducting an in depth review. Changes are likely to be seen shortly in the way cover is sold with high street lenders having to wait 14 days after selling loans and mortgage before asking the consumer if they want cover. They will also have to tell the consumer they can shop around.

The current state of the job market does not lend itself to confidence, and even the most secure positions are coming under threat; this means it is a good time, if taking out a loan, to look at loan payment protection, and ensure that you give your self peace of mind the payments will be met in the event of the unthinkable.

These policies come under the wide and varied collection of benefits known as Payment Protection Insurance, or PPI, along with mortgage cover and a number of other payments, as products that are designed for very specific purposes. They are also sometimes referred to as Accident, Sickness and Unemployment insurance – or ASU.

Like all consumer products, getting the best deal is of paramount importance, as is understanding the details of the product. There can be a great deal of difference between policies: some will pay out for a period of 12 months, and others for 24 months, this depending on the policy and the provider. It follows that a higher payment plan will be necessary to secure the longer term deal, and this will be agreed at time of purchase with the provider.

Also, it is essential the buyer knows exactly when the policy will pay out; many policies require the holder to wait for 30 days after redundancy before payments begin, and some as much as 90 days, or a figure in between, and while a number of policies will backdate payments to the date of redundancy, others leave the intervening period unpaid.

It is also essential that the buyer understands the criteria upon which the policy will kick into action: some pay out for both involuntary redundancy and incapacity – by either illness or sickness – while others are specifically aimed at covering redundancy alone. If buying one of the latter it is possible to have an added condition, for an extra fee, that allows payment in the case of loss of work from illness or accident.

One false, but widely held, belief about loan payment protection is that when one takes out a loan you are under obligation to buy the insurance protection package that is offered by the lender. In many cases there have been instances of lenders strongly coercing borrowers to do so, and sometimes even selling the insurance with the loan without explanation.

It is not the case that a borrower needs to take out a branded policy, and payment protection can be purchased as a separate item from independent providers. This is, as it happens, the most cost effective method of buying loan protection, and it is so that a saving of up to 80% can be made by buying from an independent supplier, over the cost of a high street policy.

In 2005 the Office of Fair Trading, along with the Financial Services Authority, responded to a super complaint put forward by the Citizens Advice Bureau by beginning a major investigation into the manner in which a number of high street institutions were selling PPI products.

They discovered clear evidence of mis-selling of policies, with policies sold to people who would not be able to claim – the retired, part time workers and those with already present medical conditions – and this prompted the OFT to pass the findings on to the Competition Commission for in depth investigation. As a result, the organizations concerned – all well known high street names - were fined for their misdemeanours.

The outcome will be that a change the rules concerning selling of loan protection and other payment protection insurance products will be enforced: it is expected that there will be a ban on selling single PPI and the sale of payment protection insurance products at point of sale, and also that a period of 7 days will have to be observed after the granting of a loan during which it will be unlawful to sell the borrower PPI products.. This allows the customer greater freedom to look for a better deal.

As there are so many different policies available, the market can seem like a minefield to the individual who is new to the area. However, utilising the knowledge of an independent broker can be the best way to get advice and direction on exactly which route to take. Buying the wrong policy, or one that is inadequate, can lead to costly times.

It is still so, after all, that many people regard such insurance policies as unnecessary expenditure. For the lucky this may seem to be the case, but for many more people the simple fact is that redundancy is a very real prospect. Furthermore, illness can take over ones life in no time at all, and accidents are, by nature, never predicted. All of this, coupled with the current economic client, means that taking out loan payment protection makes more sense than ever.

These are not expensive policies, and for a small monthly sum one can be assured of peace of mind that loan repayments will continue when one is out of work; this is no minor consolation if the loan is sizeable, and covers a major item such as a car, and is very much worth the outlay. Of course, there will always be those who believe it ‘can’t happen to them’ yet, if we stop for a moment, each and every one of us knows a number of people who have been a victim, at some point, of redundancy, illness or incapacity to work.

To the young, especially, it may seem as though loan payment protection is far from a priority consideration; of course, to them, life is about the now and today, not about planning for the eventualities of the future. However, if the economic situation fails to improve redundancies will continue to rise, and the need for such insurance policies will lead to many wishing they had made the right decision in the first place. Take a closer look at your situation, and maybe consider how things may change in the future, and have a look at loan payment protection, for peace of mind if nothing else.

Of course no one knows when the bottom of the present economic trough will be reached and when things will start to look up once again. Politicians tread a wary path between optimism and a realism that warns against seeing the first green shoots of recovery too soon. The fact is that nobody knows when the light will appear at the end of the tunnel. Well before it does, however, you could find yourself grateful for having taken the precaution of a very modest investment now in loan payment protection.

Though no one knows whenever the recovery might take place, it is widely believed that it will surely come. After the near meltdown of the financial system following last autumn’s credit crunch, however, it is equally widely believed that credit in the future will be rather harder to come by and subject to much closer scrutiny than in the past. For the individual, this means that the ability to secure loans or any other type of credit in the future will be heavily dependent on the record of their managing the repayment of past loans.

Loan payment protection can be regarded as a management tool for ensuring that existing loans are repaid – come what may – and that the borrower’s credit history can therefore reflect a prompt and timely repayment of previous loans. Loan payment protection insurance does this by covering the risk of the policy holder suddenly and unexpectedly being without the income from which to make the monthly loan repayments. The risk is probably greater than many people imagine. An income might be lost – or severely depleted – for example, following prolonged absence from work to nurse injuries from an accident or to recover from a persistent illness. In the current economic climate, practically everyone’s fear is the spectre of unemployment and wondering whether your own job might be the next.

In the event of any of these catastrophes, loan payment protection can ensure that vital loan repayments continue to be made, thus also protecting the policy holder’s credit status, which will be so crucial when the light begins to shine at the end of the current dark tunnel and it becomes safe to take out personal loans once again – properly protected loan repayments now, could mean cheaper and easier to get loans in the future.

Loan payment protection is sufficiently flexible to cover the repayment on most loans, with the policy holder simply choosing the amount of cover required at the outset. Although the detailed terms and conditions will of course vary from insurer to insurer, it is generally possible to cover the equivalent of up to 50% of the policy holder’s normally earned income, or £1,500 a month, whichever is less.

With the whole country in a deepening recession and economic crisis, it is hardly surprising that unemployment figures are rising fast. Personal finances are taking such a battering that the number of people declaring themselves insolvent or bankruptcy is nearing an all-time high. Managing personal finances is a difficult business and likely to get worse. For those with existing debts, of course, the problems are compounded if a regular source of income suddenly dries up. Loan payment protection can help to manage those existing debts and avert personal insolvency.

Record numbers of unemployed – a total already past two million and tipped to top three million during the course of this year – are now also being matched by record numbers of people either filing for bankruptcy or taking a last-ditch refuge in an individual voluntary arrangement (or IVA as it is commonly known) with their creditors. Reporting on figures released by the official Insolvency Service, the daily Telegraph newspaper reported on the 7th of February 2009, that a staggering 200 individuals a day were being declared bankrupt during the closing month of 2008.

It is highly likely that many of these personal disasters were brought about by an unexpected reversal of fortune following an unplanned disruption to the normal inflow of income. In words, the usual monthly salary simply stopped coming in and, without the income to pay for the repayments, there was practically no option but to default on outstanding debts and loans.

So how could loan payment protection have helped? It could have helped in the very best and most certain way possible by simply making the loan repayments on the policy holder’s behalf. It does this by paying out an agreed monthly benefit – generally decided by the policy holder to cover the amount of loan repayments due each month – in the event of an accident or illness keeping the policy holder off work and unpaid for several months at a time, or in the event of his or her redundancy.

Loan payment protection will then pay out the same agreed monthly benefit, free of tax, every month until the policy holder is well enough to return to work, has found a new job, or up to a typical maximum of 12 months. Policies are also available which offer an extended maximum payout period of up to 24 months, but the cost of the monthly premiums for such cover is naturally appreciably higher.

With this kind of insurance, therefore, loan payment protection will ensure that it is possible to stay abreast of existing commitments to the repayment of debts, thus helping to avert the considerable stigma, cost and inconvenience of bankruptcy.