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How to Buy Loan Protection Insurance Correctly

Jun 28, 2008
Loan protection insurance along with the rest of the payment protection products has caused a great deal of concern in the past. Mis-selling has occurred and some of the names on the high street we thought we could trust were handed out fines during an investigation into the payment protection sector. Is it any wonder that faith in what are actually excellent products when it comes to safeguarding against a loss of income has dropped? However when the product is understood there should be no cause for alarm and the best way to get all the information you need to ensure that the product works is to go with a specialist in payment protection.

To begin with consumers should be aware that they do have the option of shopping around for their loan payment protection. The cover does not have to be taken out alongside the borrowing and the loan or credit card should not depend on you doing so. Lenders offer payment protection with loans but you have to bear in mind that in some cases they are not properly trained to sell payment protection as they specialise in loans.

A specialist on the other hand that only sells payment protection products knows the products inside out. They pass years of experience onto the consumer to help them make a decision regarding the products suitability. Loan protection is just one of a family of products that can help safeguard your monthly outgoings.

Loan protection insurance would supply you with an income that is tax-free after you had been unable to work through suffering an accident or illness. It would also safeguard against the fact that you could become unemployed while paying back your loan. In either case a loss of income could have you struggling to repay each month. If you were recovering from illness or accident you would not want to be worrying about where you could find the money for your loan repayment. You would need to be able to concentrate on making a recovery and getting back to work and loan protection would allow you to do so. If looking for work you would want to be able to concentrate on attending interviews not having to juggle figures and bills around.

Providers will usually offer loan protection that is based on how much you wish to cover each month, up to a certain amount and how old you are when applying for the policy. You then pay the premium each month and if you are unfortunate enough to have to claim on the cover you can do so after a certain amount of days. The amount of time you have to stand before claiming on your loan protection insurance will depend on the provider. Some will provide you with an income after just 30 days of continuous unemployment or incapacity while with others it could be as long as the 90th day. Once the policy has begun to provide you with the income it would then continue to do so for a certain period before it stops. Providers usually offer a policy for either a period of 12 or 24 months.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of loan protection insurance.
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