There are many advantages to taking out loan payment protection as long as you are aware of what taking out the cover entails. You do have to check to see if you are eligible to take on a policy and this is to ensure that if you did become unemployed or incapacitated you would be able to claim. If you go with a standalone specialist in payment protection then you would be given all the information needed to do this. You would also get the cheapest quotes for the policy.
Of course the biggest benefit to loan payment protection is that you would be supplied with the income that you took the policy out for and this sum would be provided tax-free. You would then be able to use it to cover your existing loan repayments and those of any credit cards each month. This means that you are able to concentrate on making a recovery and getting fit enough to go back to work. In the case of you being unemployed it would give you the time needed to be able to look around for suitable work again.
In the past there has been much cause for concern when a super complaint was made by the Citizens Advice to the Office of Fair Trading. Some of the main problems were the high cost of protection when taking it alongside the loan and consumers being mis-sold protection as a result of a lack of information. Following an investigation by the Financial Services Authority companies were handed out fines and some changes for the better have been seen. However it is important to realise that payment protection products are valuable when taken with understanding. They can and do work in the way they were designed and the best place to take cover is with a specialist in payment protection.
Without a policy you could be left struggling to find the money each month and this is where your problems would begin. Depending on how much you owed and the type of loan would all depend on the consequences of missed payments. If the loan was secured then you are at risk of losing your property. You could also be faced with a court appearance with an unsecured loan and could have bailiffs come to take your possessions to get money to pay off the debt. You will almost certainly see your credit rating plummet and you could be refused credit in the future. It is a lot easier to get a bad mark on your credit file than it is to repair it.
Loan payment protection can be taken for a premium each month based on the amount of your loan repayment and your age. This makes cover affordable for even the younger generation with tight budgets. You would have to stand to so many days of unemployment or incapacity before putting in a claim on the policy. This usually falls somewhere between 30 and the 90th day. You would then have a certain amount of time to recover or find work which can either be 12 or 24 monthly payments and the cover the ceases.