The Pros And Cons Of Loan Protection Insurance

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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