Individuals are sometimes totally unaware that they are able to take out loan protection cover from a standalone specialist provider. High street lenders do not make it know that the consumer has choices and they can shop around. This is due to them raking in huge profits that are thought to be around ?4 billion a year.



By going to an independent specialist for your quote, you are able to knock hundreds of pounds off the cost in comparison to the quotes high street lenders offer. In some cases, protecting your loan repayments with the high street lender can boost up the cost of a cheap loan by almost half again.

You also have to be aware of high street lenders adding cover onto the cost of the borrowing without you realising. Some will do this and then calculate the interest of the loan on top of the borrowing and protection. The borrowing is not dependent on you taking a policy out with the loan. By shopping around with an independent provider, you will also have access to a wide range of information relating to payment protection. Learning as much about the product you are considering is essential before actually taking it out.

As a rule, loan protection cover would begin to provide the policyholder with a tax-free income should they lose their income after a defined period. The waiting period before commencement of the cover depends on the provider. This is usually between day 30 and 90 of continually being unfit or unemployed. Once the policy had commenced it would then continue to give benefit for between 12 months and 24 months. You should also check to make sure, if the provider would backdate the policy to the first day. Some do but others do not. This can be found in the key facts along with any exclusions that might apply.

Despite negative press that has surrounded payment protection cover and the related policies, it is still a worthwhile product. In 2005 an investigation began into the sector which revealed that polices had been mis-sold. This was brought to the attention of the Office of Fair Trading by the Citizens Advice. Following this, both the Office of Fair Trading and the Financial Services Authority investigated the sector. Fines were given to many well known names on the high street and the sector was referred to the Competition Commission. They are currently conducting an in-depth review of the protection insurance industry.

One of the changes for the better that will arise from this is the introduction of comparison tables. The tables will allow the consumer to choose the right type of policy for their needs. Loan protection cover protects the loan and credit card repayments. However, there is also income and mortgage protection available. The tables will also highlight the essential information regarding the policy. These can include the exclusions and how much a policy would cost.

It is important to remember that the actual products do work in the way they are designed. When it comes to mis-selling, it has been a lack of information given at the time of selling that has caused the majority of problems. Loan protection cover can be a valuable back up plan and faith should be restored in it.