Loan insurance changes proposed
The Competition Commission has proposed changes to the way loan insurance is sold. The majority of loan insurance policies are sold with the finance package at point of sale. Consumers therefore have little opportunity to shop around for cheaper or better loan insurance cover.
They state that payment protection insurance (PPI) should not be offered to a customer within 14 days of being sold a loan product.
On the downside, this means that some consumers will be left without cover if they choose not to accept the separate offer of loan insurance.
However, it does mean that they do have time to look for an independent loan insurance policy that provides excellent cover at a competitive price. This will allow them to buy a much better loan insurance product and pay less for it.
With BT today announcing proposed redundancies of 10,000 and other companies also laying off staff, the issue of redundancy insurance is on many peoples minds.
Personal loan insurance can provide cover for accident, sickness and unemployment and is designed to make the repayments on a personal loan for upto 12 months. Redundancy insurance can be obtained with an income protection policy which covers just your income or a mortgage payment protection policy which covers your monthly mortgage payments.
Loan insurance delay proposed - BBC News
The BBC have an interesting article on proposed changes to the sale of loan insurance policies.
A crackdown on the sale of loan insurance has been proposed by the Competition Commission. The Commission said that the proposed 14-day window would allow customers to shop around for PPI (Payment Protection Insurance). This would be a good move and gives consumers the opportunity to shop around for better value loan insurance.
Read more here.
Loan Insurance
Personal debt in the UK is constantly on the rise with more and more people falling behind on their loan repayments. This leaves them with an accumulating monthly debt, failing to repay instalments on a loan can also affect a person’s credit rating which will affect their future chances of obtaining mortgages and other types of credit. In addition to these financial problems, failing to repay a loan for whatever reason can cause personal problems, distress and even lead to depression. Failing to repay a loan because of bad financial management is one thing, but it is highly stressful if a person is unable to repay their monthly instalments because of illness, injury or being made redundant as most of the time the person has no way of protecting against these unfortunate incidents from occurring.
There is a way a person can protect themselves financially if they lose income due to one of the above reasons, taking out personal loan insurance can help with the monthly repayment costs of a personal loan or mortgage. Loan insurance policies are available from most high street lenders and specialist online companies, you can even ask for loan insurance from the same company as you have had the loan from. Due to the competitiveness of the loan insurance market, it is important to shop around and find the best deal which will suit your needs exactly. Loan insurance can be expensive in some cases so just because you received a low interest rate on your loan, don’t expect to get cheap loan insurance from the same lender.
You will find that loan companies offer the most expensive loan insurance as they do not need to compete for your business. A better option would be to buy personal loan insurance from an independent specialist provider.
Loan insurance will protect a person from the cost of their loan repayments only. To work out how much loan insurance you require it is important to add up all of your monthly repayment costs from existing loans and quote that figure to the lender, you will then be protected against that figure if you are unable to earn a living.
If a person is unable to work, it is very unlikely that income support or job seekers allowance will add up to what they used to earn whilst working, making living, let alone loan repayments very difficult. Nobody knows what lies around the corner and no one is invincible, but at least with loan insurance people have the piece of mind that they will not get into impossible debts due to circumstances which could not have been helped.
What is personal loan insurance?
Personal loan insurance is a form of accident, sickness and unemployment insurance.
Accident, sickness and unemployment (ASU) policies generally come in three different types:
The variations determine what the main aim of the policy is. With personal loan insurance, the main objective is to protect the loan repayments in the event of accident, sickness or redundancy. Should one of these events stop you from working then the loan insurance policy will payout the sum insured for up to 12 months. This should provide enough time for you to get back on your feet. At the end of the 12 months, or earlier if you return to work, the payments will stop.
Put simply, if your loan repayment is £250 per month, then this is the amount you need personal loan insurance for. The premiums for loan insurance are extremely competitive and much, much lower than policies provided by the loan companies themselves.
Providers of personal loans rely on the sales of loan insurance to produce a valuable stream of income. They do not have to provide a competitive policy and so the premiums are much higher than a personal loan insurance policy which is available from an independent source.
