Review | Mis-Selling Of Payment Protection Policies And Life Cover Policies Should Be Addressed

Mis-Selling Of Payment Protection Policies And Life Cover Policies Should Be Addressed

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Summary

Some of the ways in which the business is dealing with mis-sold life insurance policies. The difficultieslinked to payment protection policies are pointed out.

The mis-selling of life insurance cover by a significant number of mortgage lenders has to be addresseddealt with|tackled} by the Government. Steps have been taken by the DTI, who have almost completed their investigationinto the lock in of home insurance with mortgages. An announcementpreventing the practice is Mr Timescarries on that although providers may not demand that customers take out life insurance , they can be convinced that they do not have a choice, through the provider being evasive with the truth.

60% of life insurance is sold by mortgagelenders, however it can be purchased through independent advisers, direct providers or via the internet.

Then again a DTI spokesman has said that their investigation carries on into a huge range of insurance tie-ins. A provider who met Jack Straw has said that life insurance has been looked at in passing , whereas more importance has been focused on home insurance.

The problem with customers being forced to buy noncompetitive life cover and home insurance plans is just as important for both products.

The problems are even more acute with payment protection insurance. About 1/2 of all consumers who have been persuaded to take out a PPI may have been sold the wrong product. Plus the the greater part of people who purchased one of these controversial policies expect much more than they would actually collect if they were unable to pay their bills.

A wide-ranging survey has brought to light that approximately 25% of the population are under the illusion that they will get a monthly wage from their PPI policy, not understanding that the insurance would only cover their debts.

A further 15% said they thought the policy would protect them if they if they were unable to meet their repayment obligations for any reason, and 6% said they thought| their medical bills would be paid if they became sick.

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

Annual sales of Payment Protection Insurance policies are said to generate payments of around 5.4 billion pounds for the insurance industry. However a mind-blowing 4.5 billion pounds of this is said to be pure profit. Investigations suggest that some banks charge up to five hundred per cent more than others for similar.

The Office of Fair Trading is investigating the sale of Payment Protection Insurance preceding objections from the National Consumer Council and Citizens Advice. It recently highlighted concerns that banks are luring in customers by advertising seemingly cheap loans and then hitting them with massive additional costs by selling pricey PPIas part of the transaction.

As a result, a loan which appears to provide good value becomes far more expensive.

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