LOAN.UK.COM

A Guide To Payment Protection Plans

When taking out any sizable loan, you should consider loan payment protection. Here are our top ten recommended loan protection companies. Payment protection plans are designed to cover you should you be unable to meet your loan repayments yourself because of a number of reasons, ranging from being made redundant to having an illness prevent you from working.

A protection plan is most desirable to those taking out secured loans, as with such a loan a default on the repayments could lead to the lender forcing a sale of the home on which the loan is secured in order to recoup the money lent. Having payment protection mitigates this risk, as it will continue the repayments for you should you be unable to meet them yourself, providing the reason for this is covered by the plan.

The lenders featured in our comparison engine, all offer a range of payment protection plans which can be added to your loan. The cover offered will vary from lender to lender.

The details that follow are intended as a general guide only and may not apply to your specific lender.

Here are some typical benefits and common exclusions: You can apply if:

You are over 18 and under 60.
You are gainfully employed or self-employed for more than 16 hours per week.
You are resident in the U.K.

Accident, sickness, or death claims cannot be made if they are the result of an accident, sickness or related condition which existed prior to the policy being taken out.

Involuntary accident and sickness:

Your monthly payment could be made by the insurance company when you have been signed off work by your doctor for a minimum period e.g more than 30 days. The payments may typically be paid for a maximum period e.g 12 months. Cover usually only applies for the first 60 months of a credit agreement.

Involuntary unemployment:

If you have been unemployed for more than a minimum period e.g. more than 30 days you may be able to make a claim. Usually you can only make a claim if you have been continuously employed for a minimum period of time prior to a claim being made, for example 180 days. With some policies if the insurance has paid 12 monthly installments for you then you will need to have been back at work for another minimum time ( e.g. 180 days) before you can make another claim.

The Insurance company will certainly require proof that your unemployment was involuntary. There will also be a limit to the number of months that the insurance will pay your monthly payment e.g 12 months.

General points that you need to consider:

With all insurance policies there are exclusions.
Most policies only apply for the first 60 months of a loan agreement.
The maximum number of monthly payments that would be made for you will be limited to a specific number e.g six or twelve months.
Before making a claim you will have to have been unemployed, sick or hospitalised for a minimum period of time e.g 30 days.
Most insurers only pay unemployment claims where there has been a period of continuous employment prior to the claim being made.
Claims will certainly be refused if they are the result of a preexisting condition.
The insurance benefits will normally be paid direct to the lender not to the claimant.

If you end up having a dispute with an insurer you can contact the Insurance Ombudsman at:

South Quay Plaza, 183 Marsh Wall London E14 9SR or

The Association of British Insurers 51 Evesham Street London EC2V 7HQ

Please note that health information will be collected by the insurers if you make a claim. This information is sensitive personal data under The Data Protection Act 1998. The insurance company can only offer you insurance cover if you consent to them collecting and using such data when you make a claim.Your sensitive information will be protected and only used by the underwriting insurer.

We cannot give a full picture of how credit insurance works in the limited space available.

However we hope that we have drawn your attention to the need to:

1. Read your credit insurance brochure and policy carefully.

2. Make sure that you understand and accept the exclusions that apply to the policy that your lender offers.

3. Do not assume that all insurance policies offer the same cover. For example some policies cover death but not unemployment and some cover unemployment but not death. If you only opt for "single" cover only one applicant usually the first named is covered.

For further information on loan protection, visit our sister-site www.loan-protection.uk.com.

Let LOAN.UK.COM's best buy tables bring you the best lenders in the market, for you to compare the loans on offer from.

LOAN.UK.COM make it quick and easy for you!