Loan cover should be considered if you have monthly loan and credit card repayments to make. The lender will not be interested in any change of your circumstances. All they care about is your monthly repayments and this is where loan protection can help. It insures against being unable to work due to accident and sickness or unemployment caused by no problem of your own.



Loan protection would give you the money needed to continue meeting your loan and credit card outgoings. This would ensure that you would not have the lender on your back. It would also ensure you would not earn yourself a bad credit rating or even worse. In the worst case, you could be forced to give up your possessions to pay off the loan. You could even lose your home if the loan was secured against it.

The cost of protecting will vary depending on where you choose to take out the policy. You do have options for buying. The loan does not depend on you taking out cover at the same time with the high street lender. High street lenders make around ?4 billion a year by selling payment protection alongside their loans. You should choose to shop around with independent providers and get several quotes for the cheapest possible cover. This will also ensure that you get a quality product and as independent providers specialize in payment protection your product is backed with experience.

Loan cover would begin to benefit the policyholder once they had been declared unfit for work or unemployed for a certain period. This varies but is usually within 30 to 90 days. Some providers will backdate their cover to the first day of you being unfit or unemployed. Once the policy has begun, it would carry on for between 12 and 24 months, depending on the actual provider. You are able to find out when the policy would begin and end in the key facts and find out about exclusions, which could apply.

The sector has seen problems in regards to policies being mis-sold. However, this is mainly due to a lack of information at the time of being sold the policy. The consumer has to ensure that loan cover is the right type of payment protection. There are mortgage and income protection policies to consider too. Currently there is little information regarding policies, however this could soon change with the introduction of comparison tables in 2008 by the Financial Services Authority.

It is hoped that the tables will shed some light on loan cover and the related products. They will mention the exclusions and make the consumer aware of how much a policy would cost. They will also help the consumer to make the correct choice of policies. They will be given a series of questions to answer which are based on the individual's circumstances. This will then point them in the right direction for which choice would be better. It is also important to remember that it is not payment protection products that are to blame for faults within the sector, but those who sell them with no experience.