Loan Insurance

Loan Insurance

We believe there are two simple rules to follow if you are considering buying a loan protection insurance policy:-

• Never buy a single premium policy
• Never buy the policy from the loan provider

Loan repayment insurance policies have been the subject of much controversy recently. So much so that the FSA, the government watchdog for this type of policy has had to issue guidelines for the sale of loan protection insurance, which is often referred to as payment protection insurance. Several lenders have had considerable fines levied up on them by the FSA, and there has been wide spread criticism regarding the approach lenders have adopted when arranging loan protection for customers. For example lenders would ask if you wanted to protect your monthly payments, but not bother assessing your needs, or going in to the details. So if you had a 5 year loan they would calculate the monthly premiums for a loan protection policy over 5 years, and then add this amount to the loan, resulting in up to 70% of the total premiums being added to the loan being paid out as commission to the lender.

Consider this, a £10,000 loan would cost approximately £195 per month without insurance, but with insurance this would cost £265 per month therefore the loan protection insurance costs £70 per month.

Here at UKinsuranceNET we take a different stance, and offer policies that cost as little as £1.16 per £100 of benefit

For more articles regarding criticism and fines on the selling of payment protection insurance, click here to visit our Unemployment Insurance News section.