Mis-Selling of Life Cover and Payment Protection Policies
Summary
Some of the ways in which the business is tackling the mis-selling of life insurance. The difficultiesconnected to payment protection policies are highlighted.
The mis-selling of life insurance cover by a significant number of mortgage providers has to be attended todealt with|tackled} by the Government. Steps have been taken by the Department of Trade and Industry, who have practically finished their investigationinto the lock in of home and contents insurance with mortgages. An announcementpreventing the procedure is Mr Sissonsgoes on saying that while providers may not demand that customers take out Life Insurance Quotations , they can be persuaded that they have no choice through the lender being economical with the truth.
50 per cent of life cover is sold by mortgageproviders, however it can be purchased through direct providers or independent advisers.
Then again a DTI spokesman has said that their investigation continues into a large range of insurance tie-ins. A lender who met Stephen Byers has said that life insurance has been given a fleeting look, whereas more importance has been centred on home insurance.
The trouble with consumers being pressured into buying noncompetitive life insurance and home and contents insurance plans is just as significant for both commodities.
The problems are especially serious with payment protection insurance. Around 1/2 of all clients who have been influenced into taking out a payment protection insurance may have been provided with the wrong type of insurance. Plus the majority of individuals who purchased one of these dubious policies expect far more than they would in actual fact be given should they not be able to pay their bills.
A broad investigation has brought to light that about 26 per cent of people are under the illusion that they will be paid a monthly wage from their Payment Protection Insurance policy, not understanding that the insurance would only cover their debts.
Another 15% said they thought the insurance would protect them if they could no longer meet their repayment commitments for any reason, and 6% said they thought| their medical costs would be paid if they were to taken ill.
Several people thought the insurance would continue indefinitely to meet their outstanding debts, others thought their policy would cover motor car breakdowns and household bills.
Yearly sales of Payment Protection Insurance policies are said to make payments of around 5.4 billion pounds for the insurance business. However an astounding 4.5 billion pounds of this is said to be sheer profit. Analysis suggests that some banks can charge up to 600 per cet more than others for similar.
The Office of Fair Trading is studing the sale of Payment Protection Insurance following complaints from Citizens Advice and the National Consumer Council. It recently highlighted concerns that banks are enticing customers by advertising seemingly cheap loans and then hitting them with huge extra costs by selling pricey Payment Protection Insuranceas part of the agreement.
As a consequence, a loan which appears to give good value can end up being far more costly.
Posted: October 3rd, 2009 under Timothy Reynold.
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