Cheap loan protection insurance can be found but you have to go online with an independent standalone provider of the cover rather than take it out at the same time as taking out borrowing. Very often loan protection is pushed by high street lenders alongside their so-called "cheap" loans for huge profits which earns them a staggering ?4 billion in profits a year. When sold this way very little information is often given out regarding the exclusions which has meant consumers have bought cover they could not claim against.



Loan protection insurance is taken out to insure against the possibility that sometime in the future you might come out of work due to suffering from an accident, sickness or through unemployment. If this is the case and you have large loan repayments to make each month you could seriously be left struggling to find the money.

Providing you have read the terms and conditions of the policy, the cover would give you a tax free income after being out of work for a period of time. This period differs from provider to provider but can be between the 30th and 90th day. Cover would then last between 12 and 24 months which is usually more than enough time for you to get back on your feet and back to work.

All cheap loan protection insurance policies will have exclusions within them which means you might not be eligible to make a claim. There are some which are common to all policies and others are defined by the provider. Common exclusions include being in part time employment, suffering an ongoing illness, being of retirement age or if you are self-employed.

It is essential that you do check the terms and conditions because this is where you not only find the exclusions which can help you to determine if the cover is suitable but also the terms and conditions of the cover. Mis-selling of loan protection was highlighted in 2005 when the Citizens Advice made a super complaint to the Office of Fair Trading (OFT). Following this the Financial Services Authority began an investigation which is still ongoing along with the OFT referring the sector to the Competition Commission.

While there has been some improvement in the sales practices, clearly many more changes for the better need to be made in the future. In March 2008 there will be the introduction of comparison table which it is hoped will make payment protection products more transparent. The table will ask a series of questions and from the answers consumers will be able to tell which of the payment protection products is most suited to their circumstances. Along with this they will highlight the exclusions which will make it easier for the consumer to see if they are eligible to claim and will tell the consumer how much the cover will cost.

Cheap loan protection insurance is hard to find with the high street lender but a specialist in payment protection will offer among the cheapest premiums for what could be a lifeline if you were to lose your income.