If you have monthly loan repayments to keep up with every month and fear that if you came out of work you wouldn't have the money to carry on repaying them, then loan payment protection could ease your stress and bring peace of mind that if you should come out of work due to accident, sickness and unemployment you wouldn't have to struggle.
Loan payment protection can give peace of mind by providing you with a fixed monthly income each month which would be tax free and begin to pay out after you have been out of work, usually for 30 days or more and continue to pay out for up to 12 months, and with some providers for up to 24 months.
The majority of times when you take out a loan the provider will try and push the cover onto you alongside your borrowing but this is the dearest way of taking out the protection and which led to many policies being mis-sold. An investigation by the Financial Services Authority after a super complaint by the Citizens Advice to the Office of Fair Trading found that mis-selling of payment protection insurance was widespread. With many high street lenders fined during the investigation confidence in the product has dwindled but it is important to remember that the product will work the way it's designed to work if you buy it with care.
It is the exclusions in a loan payment protection insurance policy that could stop you from claiming and it is important that you read the small print to ensure that a policy is right for your circumstances. Once you have ensured that loan payment protection is right for you then shop around for your cover, favouring standalone providers as they are almost always cheaper.
When comparing your payment protection insurance quotes, then check the cover on a like for like basis to ensure that you get the right policy for your circumstances.
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of payment protection insurance, loan protection insurance and income protection insurance.
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