The phrase loan protection insurance may conjure up the spectre of a couple of ‘heavy dudes’ arriving at your front door carrying violin cases and looking to make you an offer you can’t refuse.

In fact, rather than a threat, loan protection insurance offers you the chance to free yourself from worry and avoid potentially crippling debts.

What are these potential debts and crippling costs?

Debt and the modern world

Unless you are very unusual, you probably have debts. This may be for things such as your car, furniture around the house, perhaps that kitchen extension and very probably your mortgage. You may also have one or more credit cards with debit balances.

The philosophy, politics and economics of debt are way beyond the scope of this article and no judgement is made about its respective rights and wrongs.

What is indisputable is that the majority of people manage and service their debts without problem. For many people, a loan or loans represent the only possibility they have to purchase a house, car and perhaps even some of the smaller luxuries in life such as that occasional special holiday.

The sensible and appropriate use of borrowed finance is a part of modern life and for many people this is never a problem.

One thing is clear though. Debts needs to be ‘serviced’ – in other words paid back in line with an agreed schedule. This is usually that monthly repayment that so many of us know so well. To keep to the repayment schedule we all need one thing – regular income.

Debt and changing personal circumstances

If keeping debts under control depends upon your regular income then it goes without saying that losing that regular income can immediately throw things into chaos. Few people are fortunate enough to be able to suffer a loss of income without it having an immediate and potentially catastrophic effect upon their financial position.

This could affect many aspects of your life but understandably what little income you may receive from other sources such as state benefits will be switched to your basic survival expenditure on things such as food, clothing and the utilities such as your power bills and rates.

What you will probably find is that you have precious little money available for meeting your larger debt repayments including perhaps things such as the mortgage and car.
How your circumstances can change

A loss of income may be closer to many of us than we would care to believe. Statistics published in June 2009 showed that in the period January-March 2009 no fewer than 302,000 people were made redundant (source – Office National Statistics).

Although it can’t be said with certainty, it is not unreasonable to suppose that in many individual cases this was completely unexpected and a major shock. Any notion that a job was secure should have been dispelled by events from the 1970s onwards but even so, it is easy to slip into the mentality of “it’ll never happen to me”. Even if it is predicted, unless you have some form of financial contingency plan in place, the financial effects of redundancy can be literally ruinous.

Sadly, it isn’t only redundancy that can rob us of our income. Sometimes our health may give cause for concern and we may lose our job as a result. It’s also possible that an accident may have a similar effect.

Whatever the cause, your life will change. The main question is, will that change be at least partly managed and under your control or will you be entirely at the mercy of the various parties around you?

The effect of a loss of income without a contingency plan

It may not be quite the end of the world, but if you have debts that cannot be serviced because you are without income, then like it or not you are likely to be at the mercy of others.

In essence, if you find yourself in such a situation and without having a financial ‘fallback position’ defined, to avoid financial disaster your only courses of action will be a combination of:

• Hoping you find new income almost immediately
• Relying on friends or family to help
• Spending any savings you have
• Looking for state help
• Hoping your various lenders and other creditors ‘help out’.

The first two may be very optimistic or hostage to fortune and the third a great pity – assuming you have any savings to begin with.

State help may be available but it will certainly be limited. You may be eligible for unemployment benefit and possibly some supplementary social benefits but in total they are unlikely to offer anything other than basic survival or subsistence level income. They are not going to help you meet your mortgage, car and other debt repayments.

It is true that the government may POSSIBLY be able to offer some help with a contribution to a percentage of the interest each month on your mortgage. Unfortunately though, you will still have to find the balance and it is possible that your mortgage lender may not accept interest-only payments.

At the time of writing, there is little or no other government aid available for debts relating to things such as HP, car repayments, credit card bills or bank loans (other than for a mortgage).

This leads into the question of help from your lenders and this is an important subject.

The role of creditors (lenders) in a crisis

The vast majority of organisations that lend money do not exist to serve a social purpose. Quite simply, they exist to make a profit.

As such, their businesses depend upon them lending money and being able to predict with some certainty when they’ll get it back and with what interest attached. For their businesses to survive they must keep a fairly tight control over the repayments of loans.

If individual borrowers get into temporary difficulties, some lenders (though not all) may be able to offer some forms of short-term relief or help to the people concerned. That’s because they are in the business of lending and receiving money rather than the repossession and disposal of assets.

For this reason they do not like taking legal action and trying to get their money or assets back through recoveries and repossessions. It is time consuming and expensive for them to do so and above all, it is poor Public Relations and publicity for them. No finance company wants to make headlines due to the number of cars or houses it has reposed in a given period of this time.

Therefore some, if they can, may be able to offer you interest-only payments on the loan. Far fewer MAY be able to offer very short-term payment holidays or debt re-scheduling.

Although this is an avenue that may be worth exploring as soon as you realise you have lost your income, it can only at best be a very short-term and stop-gap measure. Relying on it as the only way of keeping your house, car and other possessions ‘in place’ may be a very risky strategy indeed.

However much banks and loan companies detest repossessions and legal recovery actions, they detest bad debts and loan write-offs even more; As a result many of your lenders WILL move to recovery and repossession much sooner than you think, even if they have been able to offer some initial help. It doesn’t mean that they’re unsympathetic to your plight, just that they can’t do much about it themselves.

Losing your income – steps

The circumstances of each individual will be different. This article cannot even pretend to offer advice that would be pertinent in detail for you. What it can do is point out certain generalities that you may wish to consider should the worst happen.

• Don’t bury your head in the sand. You may get lucky and find immediate replacement income or win the lottery. However if neither in fact happens, then ignoring the problem won’t help. It won’t go away quickly.
• Notify your lenders quickly. Lenders are far more likely to offer at least some short-term help if they see you have been proactive and have behaved in a responsible adult fashion. If the first sign of your problem is that your payments stop being made, then they are less likely to perceive you as someone they can trust and who is in control of their financial affairs.
• Seek qualified help. Articles are fine but they have their limitations. There are special advisors available in various organisations. Find them through the Internet and contact them for advice.
• Don’t ignore reminder letters or payment threats. Even if you have already contacted them and perhaps agreed some short-term help, some lenders may be obliged to send you out formal letters asking for payment and threatening repossession or recovery. Make sure you respond to these clarifying exactly your position and what you are doing to try and address the problem. Consider sending your letters recorded delivery rather than just ‘phoning-up’ or sending a casual email. This could be important in any future legal action.

The reality is though that if you have lost your income, however much communication and proactive negotiation you engage in, your house and goods could be at risk unless you can start paying off the debts again. In essence, you are not in control of your financial future and need a mixture of luck and extraordinarily co-operative lenders to survive.

There is an alternative – loan protection insurance.

The principles of loan protection insurance

In a sense, the name says it all!

There is a form of insurance policy available that can deal with at least one financial aspect of losing your income – your various loan repayments.

The insurance can be targeted at a loan or loans and will make the monthly payments for you if you are unable to do so yourself because you’ve suffered an involuntary loss of income. This could include any combination of things such as your car, furniture payments or even the mortgage.

This can be a huge lifeline and it could mean that you are able to keep not only the roof over your head but also your car and other possessions around you. That isn’t just a question of life’s luxuries either. If you lose your car you may find it restricts your freedom in job searching and you are unlikely to be able to concentrate your full attention on finding new income if your house and lifestyle is being dismantled around you as your goods are repossessed.

Loan protection insurance – it’s use as a contingency plan

This form of insurance is ideally suited to use as a financial contingency plan – in other words something that would help in a variety of “what if” situations.

To utilise it most effectively, you would need to consider first of all what risks you were exposed to. Redundancy is one obvious example but also there are those risks of accident or injury.

It’s possible that your existing employer offers an exceptionally generous sickness and accident cover scheme as part of their employment benefits and you feel therefore that additional cover is not required. Alternatively, perhaps you are working for a very profitable, successful and expanding company and you feel that your role in it in future is assured. If that’s the case your major concern may be sickness or accident depriving you of your ability to work.

Whatever you decide, you can find a policy that will cover those risks. At that stage, it becomes a question of what benefits you would require should the worst happen and you need to claim.

You can decide what bills you’d like to cover and see what this totals financially speaking. Policies of this nature will often pay out up to a maximum of 1500 pounds per month or 50% of your gross income depending upon which is the lesser. They can often make payments directly to your loan companies meaning you won’t have to get involved in the administration.

These payments will continue until such time as you have found replacement income or to a maximum period of 12 months. There are even some policies around that may offer cover for 24 months.

The benefit of having this insurance in place is that it provides you with a plan to cover that ‘what if’ situation. You could at least know that your bills ‘ a b c and x y z’ would continue to be paid if you had no money coming in.

The conditions

Although insurance companies sometimes get bad press for apparently trying to ‘duck out’ of claims, in reality the vast majority publish very clearly their terms and conditions as well as what a claimant must do to meet the conditions of the policy.

These should always be read carefully before purchasing the loan protection insurance policy. It is not a particularly difficult task and in recent decades the insurance industry has made huge progress in using plain English and de-jargonising it’s policies and other documentation.

In the case of loan protection insurance, the major conditions are usually simple and logical.

1. The insurance will only cover a loss of income arising from involuntary circumstances. Typically this includes redundancy, sickness and accidents.

It is not there to offer you protection against the results of YOUR decisions. So you cannot claim for things such as resignation, some forms of dismissal, normal pregnancy, career breaks, returns to education or voluntary redundancy.

If you opted to include sickness and accident cover, you may find that certain optional medical procedures such as cosmetic surgery would not be covered.

2. If you claim, you will probably be asked to submit evidence that your loss of income was caused by a covered situation. This will usually need to be in the form of a verifiable document from an independent party. Examples may include a medical letter or your ex-employer’s statutory redundancy notice.

3. While you are claiming, you may be asked to produce periodic evidence that you remain unemployed or unable to work. In the case of redundancy, you may have to show evidence that you are actively and enthusiastically seeking alternative employment.

Points 2 and 3 above are not in any way indicating that the insurance company doesn’t trust you personally. This is entirely normal practice and it is aimed at discouraging fraudulent claims that, sadly, are fairly widespread in today’s world.

Getting your insurance in place

Obviously at some stage this is going to involve you in parting with some cash for the loan protection insurance premium but not everyone will be eligible for cover.

There are a few things worth keeping in mind.

• You will need to be in verifiable permanent employment through a recognisable employer. Working casually for a friend or relative will probably not be considered acceptable but you do not have to be working full-time. Some forms of part-time working will be acceptable but it will need to be more than a specified number of hours per week.
• You will probably need to have held the job for at least 6 months. The insurance company may also expect to see some evidence of a clear work history.
• You will need to be working in the UK. Business trips overseas would not be a problem but if you were spending the bulk of your time working abroad then finding cover may be a problem.
• The policy may insist that you have held it for a minimum period before you could claim. This may be between 6-12 months.
• If you need cover against sickness and accidents, you may have some trouble finding cover (or it will be much more expensive) if you have an existing serious medical condition. The same could apply if you work in a very dangerous occupation (e.g. deep-sea diver) or participate regularly in dangerous sports and pastimes.

Finding the best deal

The cost of this insurance can vary significantly from one company to another and thinking about things a little could save you a lot of money.

A traditional source for these policies is the lender or finance company that originally advanced the loan. For some decades they have used their position of having clients who either have or are seeking loans, to sell their versions of protection insurance.

This has not always been a smooth process for them and their clients. Historically there were complaints of irregularities in the way they sold such insurance. This included cases where it was suggested that the insurance was necessary in order to secure a positive decision on the loan application. There were also cases where clients were sold insurance that was unsuitable for them such as covering sickness when they were already suffering from a serious medical condition.

Following investigations by regulatory and other official bodies, it is planned that these practices will be stopped. It has been proposed that lenders will need to wait until 7 days have elapsed AFTER loan approved before they will be able to offer a loan applicant this insurance.

Of course you can purchase this insurance at any time and not only at the time of taking a loan out. It’s possible to have had a loan for many years (e.g. a mortgage) and then decide to protect it with an appropriate insurance policy.

Even more importantly if you’re looking to save money and get the best deal, you do not have to purchase it from the lender or a loan company.

The reason that’s important is because the prices of the loan companies are usually several times more expensive than those of the direct specialist insurance providers that operate across the Internet.

So if you do wish to formulate a “what if” plan and use insurance as its foundation, looking at the sites of the specialist providers could be a step in the right direction. These providers have expertise in loan protection insurance and a large range of policies to suit most needs. It will cost you nothing to look and it could give a big boost to your peace of mind.

There are more choice than taking a your policy with the high street lender when looking for loan protection insurance in Glasgow as you can search around and compare the cost of the insurance with a standalone provider. By doing so you could make some great savings and be able to compare the terms offered by the provider before taking out the policy.

What exactly is loan protection insurance?

Loan payment protection insurance is taken out in case sometime in the future you were to lose your own income to involuntary unemployment or incapacity. If you had a policy behind you then you could claim on the insurance and get an income that would go towards you being able to keep your loan repayments from unsecured or secured loans up to date. This income is paid to you as tax free income over a period of time which would be dependent on your provider and could be claimed on after a deferment period.

How much would my monthly benefit be?

At the time of taking out the policy with the provider you would choose how much of the repayment you make each month you want to protect with the aim of this then being your tax free benefit if you were to have to make a claim on the policy. As this is the case the provider would have to pre-agree to the amount that you choose as they will all set a limit as to the maximum amount you would be able to cover.

This income would be used by you towards servicing your loan repayments each month for up to as long as the term offered by the provider.

How long would I need to wait before being able to claim on the cover?

You could have to stand to the first 30 days of suffering one of the events before a claim could be made. However there are some providers that might allow a claim to be made on your cover only after the 60th or the 90th days have passed so you would have to check with the provider when applying for your cover.

Bear in mind you would need to find the money to maintain your repayments yourself during the time you have to wait before making your claim so if this is 90 days you would have to find money for your repayments for the first 3 months.

How long might I be able to continue claiming on the policy?

You might be entitled to continue claiming on your policy for up to 12 months with some providers and others could offer you the chance of taking out a policy that would continue for up to as long as the 24th month. Were you to take your loan protection insurance Glasgow policy that would supply an income up to the 24th if needed then the monthly premiums for the insurance would cost more as you would have security for up to twice as long?
However a policy that would supply an income for up to 12 months could be more than enough time for you to have found work or for you to have recovered and got back on your feet and be able to go back to your own position again.

Just take protection for what you want to cover

When considering a loan protection insurance Glasgow policy you would have to decide on the events that you wanted to cover. You might choose to take out a policy that would pay your benefit whether you lost your income to involuntary unemployment or incapacity. However your circumstances might state that you would be better off just insuring against the possibility of losing your income through incapacity alone if you thought that you had enough redundancy money to cover your repayments if you became unemployed. Alternatively you might just decide that you only need to cover redundancy alone if sick pay was could be relied on.

You might also be entitled to claim on your insurance if you were to have to give up working in order to stay at home and nurse a loved one back to health. Carer cover is offered by the more generous providers but you do have to check with them to find out.

Check for suitability

Before you rush into taking out any loan protection insurance Glasgow policy you would have to check with the provider to find out what exclusions there are in a policy. There will be at least the most frequently found exclusions with some providers adding in many more. For instance you would need to be in work full time and you would also have to have been working full time for a period of no less than 6 months at the time that you apply for your policy.

Debt can be a difficult thing to deal with at the best of times but can spiral out of control if somebody starts to struggle financially. Most people rely on their regular wages as their main way of paying off a loan, which means they can fall into difficulty if they ever lost this income. More frustratingly, sometimes people can be stripped of their wages through something which was not their fault, such as involuntary redundancy, or illness. Loan protection insurance in Scotland is designed to help people stuck in this kind of situation by providing tax-free sums towards people’s debts after they have become displaced from work.

This involves monthly instalments over an agreed payout period. This is often as long as 12 months, although in some cases policies will pay out all the way up to 24 months, or until the person is back in work and earning again, whichever happens first.

This can be crucial because falling behind with a debt can not only be stressful but in the long-term can affect someone’s credit rating. This can then heavily impact their ability to borrow in future and can also lead to court action and other consequences if someone falls far enough behind. These implications can be all the more hard to deal with if the person is busy trying to find a new job or concentrating on getting well again having been diagnosed with a serious illness which has kept them off work. Secured loans can be a particular concern, as they are secured against property, typically perhaps a car if it is a car loan or even someone’s house.

Loan protection insurance in Scotland has often been sold in conjunction with actual borrowing companies including banks and other lenders. Following an investigation into the market, the Financial Services Authority has previously fined some high street names for mis-selling policies in this way. This included setting people up with deals who did not actually qualify for them, such as the self employed or retired. However, this in turn meant that people have been more inclined to try to get cover which is independent to a loan, and have turn to some more independent protection specialists who can often be cheaper.

Loan payment protection insurance cover is closely related to some other types of payment protection insurance, including mortgage payment protection and income protection. Mortgage protection is geared towards helping somebody with their home loan repayments in a crisis, while income protection can actually insure a proportion of someone’s regular current income, to be spent as they wish while they look for a new job having been made redundant or lost their wages due to a long-term illness.

Getting covered

While there are different variations, all of this type of insurance normally pays out if somebody loses their wages due to involuntary redundancy, illness, or injury after an accident. A policy does not always have to cover against all three of these circumstances, and you can often get a deal which protects against only one or two, depending on what you are most worried about.

How much you would get per month towards the loan repayment is decided when you take out the policy, and companies normally allow you to simply name an amount up to a certain set limit, perhaps a certain percentage of your income. Normally you will be able to get enough to either cover completely the loan repayments or to at least protect a significant slice of them.

The premium is priced according to the amount of protection you would get per month, the payout period, and also a kind of waiting period you have to undergo after your first claim before a first payout is made. This is 30 to 90 days, although again the policyholder can often specify this. Those with a 30 day waiting period on the deal may pay a little bit more than somebody with a 90 day waiting period.

To qualify for loan protection insurance in Scotland, somebody normally needs to have held down their current job for a set period, perhaps six months. There will also be age limits and it’s unusual for somebody to be able to take out a deal if they are under 18 or over about 65. The person must be in an occupation which is not temporary or part time, and most companies require that you are working for a minimum number of hours a week in the job.

Loan protection insurance in Scotland is one of the best ways of guarding against falling behind with a debt. As it is quite flexible you can control the premium so that it fits your budget and the policy can also be adjusted to suit what you are most concerned about. In the long run it can save a considerable amount of stress and can also help to protect someone’s credit rating, possibly meaning that they come through a difficult time much more comfortably than if they had nothing to fall back on.

One of the things most people do before they take out a loan is to make sure that they will be able to meet the monthly repayments. The question less frequently asked is what would happen if they lost their regular income and with that the means of repaying the loan. Loan protection insurance Manchester could be the answer.

Loan protection insurance in Manchester is one of a group of products known as Payment Protection Insurance. The primary function of this type of insurance is to provide continuity of income or credit repayments in the event that the policyholder loses their regular source of income due to circumstances beyond their control.

The events that Payment Protection Insurance (PPI) can provide cover for are loss of income as a result of involuntary redundancy, or as a result of not being able to work due to an accident or long term illness. You can opt for a policy, which covers redundancy or health individually or together. It may be worth noting that voluntary redundancy, resignation, or dismissals are not covered by this type of policy.

What you need will depend on your own personal, financial and employment situation.
For example if your job provides you with a good sick pay scheme then you may not need additional health insurance.

There are three main types of this insurance.

The first is Loan Protection Insurance. These products provide cover for individual loan or credit card repayments.

The second is Mortgage Protection Insurance which is similar to loan protection but which is geared toward the sometimes more specialised area of mortgage lending.

These repayments may be made directly by the insurance provider to the loan account held by the lender.

The third and most wide-ranging product is Income Payment Protection insurance. This provides you with a replacement income, which is not connected to any particular financial arrangement. In contrast to loan-based repayments, you can use the tax-free lump sum as you choose to maintain your way of life.

To be eligible for loan protection in Manchester you have to be in permanent employment with a verifiable employment history for at least the last six months. You don’t have to work full time but a working week of at least 16 hours is normally required.

If you are in a high risk job or engage in what are regarded as generally dangerous sporting activities then you may find it useful to take some specialist advice as your loan protection cover could come with some additional conditions attached. Individuals with existing long term medical conditions may find themselves in a similar position.

Once you take out a policy you may have to wait for at least 6 months before you can make a claim to your insurance provider.

The amount you could expect to receive from your loan insurance will obviously depend on the normal monthly repayment. There are limits on the amount of cover you can have and this is generally 50 per cent of gross monthly income or 1500 pounds, whichever is less.

You should contact your insurance provider as soon as your circumstances change to get things moving as it can take from one to three months for your insurer to start making payments. At the end of the waiting period, some policies may backdate payments to the start of the claim. This may not apply in the case of all policies though and you may need to bear this waiting period in mind.

Payment Protection Insurance is not intended as a long-term solution. It is designed to provide cover for a period of up to 12 months. Hopefully long enough for you to get back on your feet or find a new job. There are some 24 month policies but these are relatively rare and you may find that the premiums are higher.

When you take out a loan, your lender will probably offer to sell you their own loan protection insurance. If you decide that it may be a sensible precaution to take, then before you sign up to anything, you may be interested to know that there are alternative sources of loan protection insurance. You don’t have to buy it from your lender.

There are independent insurance providers who operate principally over the Internet and who specialise in Loan Protection Insurance in Manchester. You may find that their policies can be up to ten times cheaper that those of the lenders. This can make a huge difference to your monthly outgoings so is perhaps worth checking out.

Balancing a monthly budget can be a bit of a challenge at the best of times. You may be tempted to think that adding to the problem by taking on additional expense in the form of a loan protection insurance Liverpool premium is something you just can’t afford.

Another way of looking at things though may be to ask yourself whether you can afford the risk of not taking out loan protection cover.

Loan protection is a type of insurance that is part of a larger group called payment protection insurance (PPI). If you are unfortunate enough to lose your regular income as a result of redundancy or illness, these products can provide tax-free sums of money to be used to meet monthly loan repayments.

In addition to general loan based policies, you can also take out cover for your mortgage or even to provide yourself with an alternative source of income to be used as you choose to help maintain your regular lifestyle.

Loan protection insurance in Liverpool provides cover in the event that you lose your regular source of income through no fault of your own. This means that you are covered if you become ill or are injured in an accident and can’t work long term, or if you are made involuntarily redundant. You will not be covered if you resign, take voluntary redundancy or are dismissed from your job though this latter may depend upon the particular situation and circumstances.

If one of the benefits of your job is a generous sick pay scheme, then you may feel that you don’t need additional sickness cover. In this scenario you could buy a loan protection policy with cover for redundancy only. Others may feel that they don’t need redundancy cover but could benefit from accident or illness cover. This is also possible, as is covering yourself for all three eventualities. Some policies will even cover you if you have to leave work to become a long-term carer for a close family member. Your own personal, family and work circumstances will determine what level of cover is right for you.

If you do have to make a claim on your loan protection policy you should let your insurer know as soon as possible after your circumstances change.

Policies all have different terms and conditions and you could have to wait anything between 30 and 90 days for the first payments to be made. Once the waiting period has elapsed, some policies may then backdate payments to the start date of the claim.

A typical loan protection insurance Liverpool policy will have a duration of 12 months. Some policies may make payments for up to 24 months but these are less common and will obviously cost more.

Once you have made a claim you will almost certainly have to provide evidence of your change in circumstances. If you have been made redundant you will have to officially register as unemployed and be actively seeking employment. This may mean ‘signing on’ at the modern day equivalent of the job centre.

Incapacity to work due to illness or injury will almost certainly require a medical certificate. If you have left work to care for a relative, you will have to officially register as such.

With a loan protection policy the monthly payment you receive will generally match the actual loan repayment and many insurers will make the payment directly to your loan account so you don’t have to get involved in the transfer at all.

A point to note which may be more relevant for mortgages is that few if any policies will pay out more than 1500 pounds or more than 50 per cent of your gross monthly income which ever is the lesser.

To be eligible for cover from loan protection insurance in Liverpool, you will have to be in permanent employment. This does not have to be full-time employment but you will need to work more than a pre-specified number of hours per week.

Your premiums may be higher if you participate in dangerous sports or if you are in a job, which is seen as high risk by the insurance companies. Similarly, if you are looking for illness cover and have an existing medical condition you may find that some policies are not suitable for you.

You should carefully check policy terms and conditions before you buy as any premiums paid could be lost if you late find that you are ineligible for cover.

A final point to note is that lenders are rarely if ever the best source for this type of insurance. There are independent insurance providers operating via the Internet who are specialists in this type of loan protection insurance in Liverpool. Their policies can be up to 10 times cheaper than those of the big lenders so may be worth checking out.

The days when no one bought anything without saving up for it first are for many of us a thing of the past. Taking out a loan or using a credit card for those must-have-it-now items is both commonplace and convenient. One downside of this approach though is that each month there are loan repayments that have to be made. Taking out a loan protection insurance policy can help to ensure that these financial commitments can be met even if our financial circumstances change for the worse.

Loan payment protection is one of a group of payment protection insurance products also known as PPI that will fund repayments to loan and credit card companies if you are unlucky enough to lose your regular income and be unable to meet the repayments yourself. There are other products which provide cover for mortgage loans specifically and a third type known as Income Protection which gives you a temporary replacement income stream to help you maintain your lifestyle.

A condition of this type of payment protection is that your loss of income must be through no fault of your own. It won’t cover you if you resign or are dismissed for example, or take voluntary redundancy. What it will cover is involuntary redundancy, illness or accident. You may see these referred to as ASU policies that is short for Accident, Sickness and Unemployment. Depending on your own circumstances, you may not need cover for all three of these eventualities. You can tailor your loan protection to your own personal, family and workplace circumstances.

If you are in a job that has generous sick pay provision for example you may not need additional cover against illness and it is perfectly possible to take out a loan protection insurance policy that covers you for involuntary redundancy only. Similarly other policies can provide cover for illness and accident alone.

To be eligible for loan protection insurance you will normally have to have been in regular permanent employment for at least the past 6 months. You don’t always have to be working full time but many insurers will insist on a minimum of 16 hours per week.

If you do lose your income and have to make a claim on your policy, you can expect to have to wait anything between 30 and 90 days before the first payments are made. The exact waiting period will vary from policy to policy and there are some policies that may then backdate payments to the start of your claim.

Loan protection of this nature is not designed to be a long-term facility. Generally policies will fund repayments for a maximum of 12 months. 24-month policies can be found but these are not so common.

A feature of many of these policies is that they can make the repayments directly to your lender. You don’t have to get involved at all. Exceptions to this are the income-based products where tax-free lump sums are paid each month for you to manage your commitments as you see fit.

Although exact terms and conditions will obviously vary from policy to policy, you could expect to have to provide your insurer with official evidence that you are no longer able or fit to work. This could take the form of a medical certificate for example if you have a long-term illness. If you have been made redundant you may have to show that you are officially registered as unemployed and are actively seeking work. Your insurers may ask for this documentation regularly during the period of your claim and they would expect you to let them know immediately of any change in circumstances. Failure to do this may invalidate your policy.

When you initially took out your loan your lender may have offered to sell you some form of loan protection insurance. You may or may not have taken it. Unlike car insurance it is completely voluntary. Even if you originally decided not to take out any cover it is possible to change your mind and take it out at a later date.

A common misconception with this type of insurance is that you can only buy it from your lender. This misconception is something that many of the big lenders have done nothing to correct. In the past some lenders actually encouraged borrowers to believe that their insurance was a compulsorily part of the loan agreement. Others even mis-sold policies to their clients who found that they were ineligible to claim according to the terms and conditions of their policy.

This resulted in numerous complaints to the Citizens Advice Bureau and the Office of Fair Trading. The Competition Commission and the Financial Services Authority both investigated these selling practices and end result was some heavy fines for some of the lenders and new regulations for the provision of payment protection insurance.

Lenders can no longer give the impression to their borrowers that loan protection is mandatory. They now have to wait at least 7 days before they can offer their borrowers loan protection cover effectively putting an end to pressure selling.

The fact is though that there are alternatives to the big lenders for this type of cover. Borrowers are free to buy their loan protection insurance from any of the specialist insurance providers that specialise in the payment protection market. Many of these expert companies can be found on the Internet where you can also browse policy documentation to fully acquaint yourself with terms and conditions.

It is generally acknowledged that the premiums for a policy bought from one of the independents can be many times cheaper than the equivalent cover bought from one of the big lenders. The choice is yours. If you decide you need loan protection insurance you may be surprised at how much money you can save if you shop around.

Loan protection insurance can offer you the peace of mind that can help you to concentrate on getting better or finding another job without the worry of repossession or legal recovery proceedings.

Loan protection insurance in Northern Ireland effectively serves as one of your best solutions to financial protection for involuntary redundancy, or incapacity due to accident or illness. This insurance product is one of three common products that form the payment protection insurance sector. This umbrella of solutions pay monthly benefits to replace lost job income following a covered event. Some people fail to consider the importance of such protection, or they mistakenly believe the State offers support to everyone while out of work. The government only helps a small percentage of people and the aid is usually quite small.

Along with loan payment protection, mortgage payment cover and income payment protection insurance helps form this important insurance portfolio. Loan cover is commonly intended as a means to pay for monthly loan or credit card payments when job income is lost. Mortgage payment protection is a resource that can save your home by allowing you to meet monthly mortgage repayment obligations. Income payment protection is used to pay for financial needs such as bills or household items, including groceries. Although each product has its own specific purpose, they all function as replacement for lost income for a period of time after an insured event takes place.

More information about loan protection insurance in Northern Ireland

The payment protection products have some common features that are important to consider as you look for the right solution to meet your needs. Each policy, for instance, has its own particular payout period, which could usually be 12 months long or 24 months long.

The starting point of your benefits payments is another important feature that you need to examine before selecting a plan. Some policies would deliver the first payment at 30 days after the insured event, while others would start 60 or 90 days later. People that have a tight monthly budget often have to focus on policies that would start after 30 days.

How much cover do you buy? This is an important question to answer. You are always in control of how much protection to buy, though there is a cap. Generally, the highest level of protection is the lesser of 1500 Pounds or half your regular gross monthly income. Benefits are tax free.

To be able to collect benefits from a policy, you have to meet some basic eligibility guidelines. You usually have to be employed full time for a period of at least six months. Retired people, part time employees, and people that have pre-existing medical conditions usually can’t collect benefits under policy terms and conditions.

Protection you get with payment cover

There are two common types of protection available with loan protection insurance in Northern Ireland. Involuntary redundancy and incapacity for accident and illness are your options. While the broadest cover comes when you buy benefits for both, some people choose just one event or the other.

Some employers offer benefits to employees for situations where they are out of work for injury or prolonged illness. This makes this cover not necessary. Others do need benefits for accident and sickness, but save on premiums by not buying redundancy benefits. This only makes sense if you can quickly get a new job and you have funds to sustain you.

Carer cover is a nice extra protection that you can sometimes get with your policy. There are some providers that add this to their policies at no extra charge. This protection pays monthly benefits while you are out of work to help care for the health of a sick or injured family member.

Shopping for loan protection insurance in Northern Ireland

Not all providers are equal in terms of finding value with payment cover solutions. Independent insurance specialists usually have the best service and much lower rates. However, financial institutions still managed to control the market for a long time. They did this by bundling their expensive insurance with loan product and pressuring customers to buy.

Thanks to a 2005 super complaint by Citizen’s Advice, action has been taken to help put an end to this practice. The Office of Fair Trading had the Competition Commission review the sector. The review produced several recommendations for improvements, resulting in a fairer marketplace for the consumer. You should now find loan protection insurance in Northern Ireland that runs about ten times cheaper. Mortgage protection is around four times cheaper through an independent provider. Income payment protection can be around five times less expensive. The savings are important to the value of your solution.

Cars, new kitchens, bathrooms, and home extensions are just a few examples of why people need to take out considerable loans. This is nothing unusual and many people have found the only way to afford some things is to borrow. With a bit of planning and without overstepping the mark, somebody can typically cope well with a debt, but this can change if they experience something unexpected, such as a redundancy or illness. These can lead to the loss of someone’s income, which has serious implications for their ability to keep up with a debt. Loan protection insurance for Leeds consumers might be an option for anyone who is worried about how they would cope if they lost their income, as it can back up someone’s ability to meet repayments.

This a form of short-term financial assistance which can help somebody who loses their working income because of long-term illness, injury after an accident or involuntary redundancy. Of course it will involve an insurance premium, and this is one of the key issues with loan protection, which is part of the payment protection insurance industry. The cost of this kind of insurance can vary dramatically from one provider to another, so it can be important to understand how this kind of cover works and how it is often sold.

After making a successful claim in the event of the above circumstances, an insurance company provides a monthly tax-free amount towards the cost of the regular repayments on the loan. How much you get is really down to the policyholder although they will have to stay within the company limit. So a firm may say you can only protect a certain amount per month, and this may or may not be enough to protect the amount of your loan repayment depending on how big it is. In many cases it should be enough to protect all or at least a significant slice of it.

Payments then continue for a set period unless the person returns to work before the maximum payout period runs out, or in the event that the loan happens to be paid off. A typical payout period maximum is about 12 months. Normally the longer the policy payout period, and the bigger the monthly payouts, the more expensive the policy premium will be, although as said before quotes can vary dramatically between providers.

As a payment protection insurance product, loan protection insurance in Leeds and elsewhere has attracted some criticism after the industry was investigated by the Financial Services Authority (FSA). The body actually fined several high street lenders in 2007 after it found they were mis-selling deals to consumers. This typically involved attaching an insurance deal to a debt, providing the consumer with the loan but also insurance for it as well, often at an inflated premium price. In some circumstances the cost of the premium is added into the cost of the loan, meaning the person was paying interest on both.

Although insurance like this is still offered attached to deals, somebody is entitled to turn down this cover and still get the loan from their bank or lender and then get an insurance policy which covers the debt from somewhere else. Following the FSA action, more attention was turned to independent standalone insurance companies which don’t deal in borrowing but only in payment protection insurance policies. These could prove much cheaper, and their deals have been known to be as much as 80 per cent cheaper compared to some companies.

Good value deals can be a psychological bonus, as the person in question knows that they will get viable protection with a debt in the event they lose their income through no fault of their own. This then also means that they could protect their credit rating, as falling behind with commitments can harm someone’s ability to get borrowing in future.

Loan protection insurance in Leeds is also quite flexible in that you can often get policies which only protect against certain situations, i.e. only involuntary redundancy or only for illness. This can cut the price of the premium and provide a deal which is more suited to someone’s concerns and needs.

While loan protection insurance in Leeds can be poor value when bought from certain channels, as with anything in the UK, protection is available for just a few pounds per £100 worth of cover from certain standalone providers. This means that despite the spotlight being place on the industry by the FSA, there are many ethical and good value deals which can provide just the safety net that some debt holders may be looking for.

Do you know how important your credit rating is to your financial well-being? If so, you have likely considered the advantages of loan protection insurance, or another of the common payment protection insurance (PPI) policies. Loan protection cover is a product that is designed to provide replacement benefits payments to you for a specified period of time during involuntary redundancy, accident or illness. The payments allow you to keep up with your debt obligations, such as personal loans or credit cards, while you are out of work.

The other two common PPI products are mortgage payment protection insurance and income payment protection. Mortgage payment cover is focused on you keeping your home. It helps you keep up with your monthly mortgage repayments. The income payment cover is a general financial policy so you can meet financial needs. All three pay tax free benefits with monthly payouts following an insured event leading to your unemployment. Though they have slightly different purposes, the basic nature of the products is the same. They offer you your best opportunity for financial protection against involuntary redundancy. Since the government only helps a few people and the amount of assistance is small, you need to be responsible for your own cover.

The terms of loan protection insurance

What is the length of the typical loan protection policy? Some policies run for a period of 12 months. Others run for 24 months. If you are comfortable that you can find a job within one year you might be fine with a plan that pays benefits for 12 months. Otherwise, you might look to just 24 month long covers.

When do benefits payments kick in? Some plans begin paying benefits just 30 days after the insured event. If you are on a monthly budget, you may want to stick to these types of covers. On the contrary, if you can afford to take on a bit of a gap between your last income payment and your first benefits payment, you might also consider policies that kick in 60 days or 90 days after the triggering event.

How much cover is the right amount? Of course, as is the case with the other issue, you must make the decision with the help of a reputable insurer. If you have savings or other additional income, you could save a little money on premiums by taking on less cover. However, for many people, the best protection comes from taking on the maximum allowable cover. Typically, the highest available monthly benefit is 1500 Pounds, or half the normal monthly gross income amount, whichever is lower. Remember that the benefits are tax free.

Are you eligible to collect benefits from payment cover? If you are employed full time for at least six months, you are eligible for insurance. This excluded retired people and part time employees. People with pre-existing medical conditions are also not able to collect benefits under the terms of protection. This has not stopped some financial institutions from mis-selling the policies to those that are not eligible.

The events you can cover with loan protection insurance

The three typical events that you can insure under a payment cover policy are involuntary redundancy, accident, and illness. You can find policies that protect against all of these but you can also opt to cover just one of them. If you have good illness and accident protection from your employer, you might just go for the redundancy protection. However, others might need the accident and illness covers but decide they can do without the involuntary redundancy cover. This only makes sense if you are quite confident that unemployment will not last long or if you have good savings.

Another add-on benefit that you can often find at no additional charge with the more generous providers is carer cover. This is a unique insurance benefit that pays monthly replacement payments when you must leave work to tend to the care of a sick or injured family member. It can be stressful to manage the care of an ill loved one while trying to do your work as well.

A good deal from an independent insurance specialist

For many years, consumer bought loan protection insurance from financial institutions despite the pricy premiums. Was it because they enjoyed getting overcharged? Of course not. The sad reality was that many consumers did not realize they had options to explore in the open market. Large banks often pressured loan customers to buy their expensive payment cover policies in combination with their loans. Sometimes they would even add the premiums into the total repayment with discussing it with the customer first. They would put the details in the fine print of disclosures.

In 2005, leading consumer advocate group Citizen’s Advice brought attention to the PPI sector with a super complaint to the Office of Fair Trading (OFT). The complaint highlighted the common mis-selling of policies to ineligible consumers. It also addressed the bundling of products that led to unfair selling to unknowing customers. At the same time, the Financial Services Authority (FSA) investigated the sector.

In 2007, the FSA fined many leading high street companies that it found guilty of mis-selling. This shed light on the practice and sent a clear message that such practices would no longer be tolerated. The OFT referred the sector to the Competition Commission for further review. The Commission responded by issuing several recommendations for improvements. First and foremost, they placed a 7 day waiting period on banks that want to sell insurance to new borrowers. This helps relieve some of the pressure and gives consumers a chance to explore the open market.

Independent insurance specialists have now come to the forefront. Along with better service and support, they have more affordable premium rates. Loan protection insurance is 10 times less expensive with an independent seller versus a large bank. Mortgage payment cover is four times cheaper. Income payment insurance is five times less expensive. This is why specialists are now recognised as the best source for payment cover value.

If you buy loan protection insurance in Bristol then you can protect the repayments of your secured or unsecured loan against the possibility of losing your income to involuntary redundancy or incapacity. If you were then to suffer one of these events you could claim on the insurance which would provide you with an income to be used towards servicing your repayments.

How does the protection work?

Loan payment protection is not designed to be claimed on if you should become unable to work through accident or sickness for just the odd couple of days. You would have to have suffered from involuntary redundancy or incapacity for a period of time which would depend on the provider you had chosen to take out your cover with. There would also be a term at which the policy would cease and this would also be dependent on your provider so needs to be checked when taking out the cover.

How long might I have to wait before being able to make a claim?

You might have to stand to just 30 days of continuous involuntary redundancy or incapacity before you make your claim but there are some providers that could ask you wait for up to the 60th or 90th days before claiming. If you need to wait for the longer term then you would of course have to find the money for your repayments and outgoings yourself during this time so the protection could provide more security if you could claim sooner rather than much later.

How much income would the policy provide me with?

The amount that you would get back from your loan protection insurance Bristol policy would depend on the amount that you chose to protect when you applied for your policy. This would be up to so much of the monthly loan repayment that you have to make each month to your lender. There would be a cap on the amount you could choose to cover so the provider does have to pre-agree to the amount that you choose when you apply for the cover.
This income is yours tax free for over the term of the policy if you need to make a claim and have to continue claiming for up to the full term.

How long would the protection continue supplying an income?

You do have to check this when you take out the cover as this can differ with providers. Some could allow you to continue claiming on your income for up to a maximum of 12 months and then the cover would cease supplying you with your income. Others however could continue giving you an income over a period of 24 months with a payment each month for up to this time if it were needed.

While you might think cover providing an income for up to 24 months would work out better than one paying over 12 months you would need to take into account that a policy that could pay out over the longer term would work out more in monthly premiums.

What events could I insure my loan repayments against?

You could take a policy that would pay out your income for either involuntary redundancy or incapacity if you should become a victim to either of these events. You could also choose the events you wanted protection against. For instance if you have good sick pay to rely on then just choose to cover your events for involuntary redundancy alone. Alternatively you could choose just to take your policy for incapacity alone if it suited your needs more.

Your provider could also have included extra cover in your policy by way of carer cover. If you have carer cover then you would be eligible to claim if you were to have to stop working full time to stay at home with a loved one who needed caring for. However, only the most generous providers will include this as standard in your loan cover.

Why should I consider taking out this insurance?

If you were to try and claim an income from the State towards your repayments then you could find that any income you are entitled to might not match your own in anyway which could leave you struggling. You would have to prove you are eligible for an income from the State and you would also have to wait for several weeks before seeing any income from the State.

With a loan protection insurance Bristol policy to fall back onto you would know how much money you would be entitled to, when a claim could be made and how long your benefit could continue.