A quick introduction to UK loan protection insurance

UK loan protection insurance has been in existence for many years but has never been as popular as it is today. This popularity could be for many reasons, but only one of them matters. A higher percentage of individuals are in debt today than the figure associated with times gone. The consumer culture that we all live in encourages individuals to spend, and the availability of credit has contributed to that. These two features of society combined have led to a massive rise in demand for UK loan protection insurance.

Whilst the existence of UK loan protection insurance is great for consumers in many ways, the desperate need for it is not. People should be choosing to have UK loan protection insurance because they want peace of mind, and not because they are so scared that they will find themselves in severe financial difficulties should their source of income be cut off.

UK loan protection insurance protects an individual’s loan repayments should he or she fall ill or have an accident and be unable to work, or if he or she lost the job that would have enabled them to pay the debt off in the first place. It is also designed to pay out for up to twelve to twenty-four months after an initial qualifying period has lapsed. This is necessary for individuals in debt, especially those already struggling to pay off debts whilst in full-time employment!

The premiums associated with UK loan protection insurance vary, depending on the level of the loan, the interest rate of the product that you took out, and personal circumstances. Some financial institutions ask for monthly premiums, other annual ones, and then some add the total cots of the UK loan protection insurance to the loan itself. These are all factors and elements that you have to weigh up before taking out the insurance. If that sounds a little confusing then wait until you read the terms and conditions – make sure that you fully understand them before signing on the dotted line.

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 merely 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 found that in some cases, loan protection policies were being sold to individuals who could never benefit from them. This is 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 loan protection, and all of them are contained within the small print, or the terms and conditions. It is therefore essential 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 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 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 primary 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!