Loan Protection Can Work If You Take The Time To Understand A Policy

Loan protection, or ASU insurance as it is also known, can be taken out by those who have monthly loan repayments to make and who are in full time employment and worry that they might find themselves out of work due to suffering from an accident, prolonged sickness or through such as unemployment.

Providing you have made sure that loan protection would be suitable for your needs then it would begin to payout after a pre-defined period of time of the policyholder being out of work continually which can be between 31 days and up to 90 days with some providers.

The majority of policies are backdated to day one and would then continue to give you a tax free income for up to 12 months and with some loan protection policies, for up to 24 months. You do have to make sure that a policy would be suitable for your circumstances as the cover isn’t suitable for everyone but providing that it is then it could give you peace of mind and help to keep you debt free. Some of the most common exclusions include only being in part time work, retired or suffering from an illness at the time of taking out the policy.

Loan protection has in the past caused confusion and while some changes for the better have risen, many more changes still need making. The majority of policies that are sold alongside the loan from the high street lender have been sold without the consumer being fully aware of what they are buying and don’t realise a policy has exclusions within it or the total cost of the cover when added onto the loan.

In 2005 the Financial Services Authority began investigating the sector after a super complaint was made to the Office of Fair Trading (OFT)_. Following this they handed out fines to several high street names before the OFT’s referral of the sector to the Competition Commission. They are reviewing the loan protection and payment protection insurance industry and are expected to reach their conclusion in February 2009.

If you want the protection and peace of mind that loan protection can bring then make sure you understand the product and what it is capable of doing and stick with standalone providers of loan protection and payment protection insurance for the cover.

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Loan Insurance Can Give Peace Of Mind

The Loan insurance is taken out mostly  to safeguard against the fact that if by chance you were to lose your income then your loan repayments would still be able to be paid each month without worrying about from where you would be able to find the money to pay the loan repayment.

When bought with keeping your circumstances in mind it could give you a replacement income each month which was determined at the outset when you got the quote for the cover and this would be determined by the sum of money you payout each month for your loan repayments. Once you had been out of work for a pre-defined period of time which is usually between 31 and 90 days then you would receive a tax free lump sum payout for up to 12 months and with some providers for up to 24 months. You do have to be aware that there are lot of factors involved which can make you ineligible to claim against a policy and you have to make sure that you read the small print and the key facts of a policy before taking it out. Some of the most common facts include if you are self-employed, if you are of a retirement age, if you only work in a part time position or if you have an ongoing illness at the time of taking out the policy.

Loan insurance in the past has caused a great deal of controversy when the sector was investigated in 2005 by the Financial Services Authority after the Office of Fair Trading received a super complaint from the Citizens Advice which revealed mis-selling was widespread. Many high street lenders were fined and the sector was then referred to the Competition Commission for a review which is expected to reach conclusion in early 2009. While some changes for the better have already arose the Financial Services Authority have revealed that very little progress has been made when it comes to the selling techniques, many firms are still not giving enough information and making the product easy to understand at the time the policy is taken out.

The specialist standalone provider will always offer the consumer the information needed so that they can ensure they have a policy that is suitable for their circumstances by giving them the key facts of the policy along with the exclusions. Loan insurance can give great peace of mind and security of an income but only if you are eligible to claim the loan insurance.

One change for the better which will occur in March 2008 is the introduction of comparison tables which will allow the consumer to answer questions which will then lead to them knowing which type of policy is suitable for their needs and how much they will pay along with outlining the exclusions. Until this happens the specialist provider is your best option and will always be able to offer you the cheapest premiums for the monthly premium along with excellent advice on all aspects of a loan insurance policy.

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Getting The Protection That You Need With Loan Insurance

Loan insurance has always supposedly been designed to offer individual borrowers the peace of mind they need to feel safe n the knowledge that their debt is protected against ill health and unemployment. However, investigations into the payment protection insurance industry by the finance industry regulator Financial Services Authority have proved this not to be the case in the last year or so.

Instead of protecting the consumer, loan insurance was a cash cow for high street banks and lenders, providing them with a decent profit as a result of the strict terms and conditions that contain several exclusions. As a result of those very exclusions, many individuals were unable to claim on their loan insurance as and when they needed to. This may have resulted in their debts becoming even more severe and most certainly brought on financial difficulty through no fault of their own. As a result, in some cases, loan insurance represented very bad value indeed.

Some of the exclusions contained within the loan insurance small print should have been highlighted by sales representatives that sold the loan insurance to individuals in, but profits were apparently more important. This simply serves to highlight the fact that the general public needs to be more informed about loan insurance and what it can do for them.

It is most definitely up to the consumer to read the terms and conditions associated with the loan insurance that they are considering to make sure that they would qualify for a payout should they need to claim. This is absolutely necessary for peace of mind and also to escape the individuals that would dupe them for profits and results. Instead of being a statistic, consumers need to be pro active and help themselves because, as far as loan insurance is concerned, there are very organisations that will do it for them.

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Loan Payment Protection Insurance Needs Careful Consideration If It Is To Work

Loan payment protection insurance can do the job it’s intended to do and it can do it well providing you have first ensured your circumstances are suitable for a policy before you take it out. You have to understand the product before you buy it and read the small print of the policy to make sure that the exclusions which can be found in all payment protection policies won’t stop you from making a claim.

When you have made sure it is a suitable product then you can get a quote for loan payment protection insurance with a standalone specialist provider. Historically, the standalone provider is always the cheapest way to purchase the cover and the cover should be avoided being taken out alongside the loan from the high street lender as this can adds hundreds more onto the cost than it need too. The specialist will give you the cheapest quotes along with the advice you need to make sure that you understand what you are buying, whether it is suitable for your needs and how much the cover will cost in total.

Loan payment protection insurance can be taken out if you want to protect your loan repayments against the fact that you might lose your income through suffering an accident, illness or if you were to be made redundant and should be unable to continue repaying what you owe each month. If you get behind on your loan repayments then you will get into debt and earn yourself a bad credit rating which could take years to repair. Loan protection could give you a tax free income each month which enables you to make your monthly repayments without worry, policies generally payout anywhere between the 31st day and the 90th day of being out of work and would then continue for between 12 and 24 months. This is usually more than enough time to get back on your feet and back to work again.

However in the past the protection has been slated and earned itself a bad reputation but it is important to realise that it isn’t the products which are to blame but the poor selling techniques of the lenders who have no experience in selling payment protection products. Problems were brought to the attention of the Office of Fair Trading in 2005 after the Citizens Advice made a super complaint. The Financial Services Authority began an investigation and  fined several major high street names for mis-selling the cover alongside loans and mortgages.

During a recent review it was found that while some changes had been made many firms were still not making policies clear enough at the time of selling them and consumers were still confused by what they were actually buying, how much the cover cost in total and what the exclusions in a policy meant.

A comparison table is set to make this easier when it is launched in March 2008, the tables will help the consumer to decide what policy is suitable for their needs, it will tell them how much it will cost and what the exclusions mean which should make buying the cover a lot easier than it is at present. As loan payment protection insurance does need careful consideration if it is to work as intended then stick with a standalone specialist who knows the business and who can give you the information you need along with the cheapest quotes for the cover.

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A Quick Guide To Loan Protection Exclusions

Loan protection has been in the news a lot recently as a result of consumer accusations that the providers of loan protection are simply ripping off consumers to profit rather than assessing what is in their best interests. This may sound like a wild claim until you are presented with the evidence.

The finance industry regulator the Financial Services Authority has in fact found that in some cases loan protection policies were being sold to individuals who could never benefit from them because they would not be eligible to claim should they find themselves out of work as a result of sickness or unemployment.

There are a variety of reasons why someone would be unable to benefit from or to claim on loan protection, and all of them are contained within the small print, or the terms and conditions. It is therefore important that a consumer reads this information before taking the loan protection out.

Although every individual policy will have its own set of exclusions, and they largely depend on the company, there are some generic ones that all loan protection policies have. The first is that you have to be between 18 and 64 to claim on the majority of them. Any older than that and you are no longer deemed to be of working age. Some do not include this condition now as a result of the act against age discrimination, but it is still worth looking for or asking about.

You also have to be working on a full time basis to be able to claim on loan protection. If you work less than sixteen hours a week or no longer work then you cannot claim. The whole idea behind loan protection is that it enables you to maintain repayments if your income is dramatically reduced. However, if you are not working to begin with or are not the main wage earner then it could be argued that your debts should not be affected.

Of course these are only two of the exclusions associated with the terms and conditions of loan protection, but already you should have an idea as to whether you qualify for it! Be sure to read all of the terms and conditions and take independent advice if necessary and you will not go far wrong!

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The Pros And Cons Of Loan Protection Insurance

Loan protection insurance has come under fire recently as a result of Financial Services Authority and Office Of Fair Trading investigations and the subsequent referral to the Competition Commission. Some consumers and financial commentators have denounced it as a poor value product, and it may be in terms of the cost of premiums that some providers, but the actual theory behind loan protection insurance is extremely advantageous and beneficial.


There are certain positives and negatives associated with loan protection insurance that may enable an individual to make up his or her mind as to whether loan cover is needed or not. Neither the positives nor the negatives may be immediately obvious because of the bad press the payment protection insurance industry has received in the past couple of years. However, loan protection insurance should be looked at impartially until an individual knows all of the facts.


In terms of positives, loan protection insurance can provide infinite peace of mind. The last thing you want to worry about if you lose your job is whether or not you will be able to pay off your loan. With loan protection insurance, you do not need to worry at all. It will pay off up to twelve to twenty-four months’ of repayments over that period of time, thus removing the worry for you. The product itself can be of great value in such circumstances. There are also standalone policies that can be paid monthly, thus not stretching your budget too much.


However, amongst the negatives is the fact that many individuals may actually end up paying more for their loan protection insurance because some providers add it to the loan total, which thus increases the repayments made. Also, loan protection insurance may represent poor value for some consumers because it is not relevant for everyone. If you work less than sixteen hours a week, for example, you would not be eligible to claim, and you may not have been told this when you took the policy out. 


It is up to every individual to weigh up the pros and cons before taking out loan protection insurance and to seek independent advice if necessary.

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