The Life Insurance Guard

Summary
Some of the ways in which the insurance market is tackling mis-sold life insurance policies. The complicationsassociated with payment protection policies are emphasized.

The mis-selling of life insurance cover by a considerable amount of mortgage lenders has to be tackled by the Government. Action has been taken by the Department of Trade and Industry, who have nearly concluded their investigationinto the tie in of home and contents insurance with mortgages. A press releaseforbidding the practice is Mr Southgoes on saying that although providers may not insist that clients have life insurance, they can be convinced that they have no choice through the lender being economical with the truth.

60 per cent of life cover is sold by mortgageproviders, although it can be bought through direct providers or independent advisers.

Then again a Department of Trade and Industry spokesman has said that their investigation carries on into a huge range of insurance tie-ins. A provider who met Gordon Brown has said that life cover has been glanced at, while more importance has been placed on home and contents.

The trouble with clients being forced to buy noncompetitive life cover and home insurance plans is equally important for both commodities.

The concerns are much more serious with PPI. Around 1/2 of all customers who have been influenced into taking out a  PPI may have been provided with the wrong type of insurance. Plus the the greater part of those who purchased one of these dubious insurances expect much more than they would actually collect if they could not pay their bills.

A wide-reaching analysis has found that about twentyfive per cent of the population believe that they will earn a monthly income from their Payment Protection Insurance policy, not understanding that the insurance would only cover their debts.

Another fifteen per cent said they understood the policy would cover them if they if they were unable to meet their repayment obligations for any reason, and six per cent said they thought their medical expenses would be paid if they fell ill .

Many people thought the insurance would carry on indefinitely to cover their outstanding debts, others thought their policy would cover motor car breakdowns and household bills.

Yearly sales of PPI policies are said to produce payments of around 5.4 billion pounds for the insurance industry. However a stunning 3 9 billion pounds of this is said to be sheer profit. Studies suggest  that some banks can charge up to 600% more than others for a comparable product.

The Office of Fair Trading is investigating the sale of PPI preceding complaints from the National Consumer Council and Citizens Advice. It recently empasized concerns that banks are enticing customers by advertising deceptively cheap loans and then hammering them with large additional costs by selling pricey PPIas part of the deal.

s a result, a loan which seems to offer good value turns out to be far more expensive.