Mis-Selling Of Payment Protection Policies And Life Cover Policies Should Be Addressed
Summary
Some of the ways in which the insurance industry is dealing with the mis-selling of life insurance. The difficultiesrelating to payment protection policies are emphasized.
The mis-selling of Life Insurance policies by a significant amount of mortgage lenders has to be addresseddealt with|tackled} by the Government. Steps have been taken by the DTI, who have practically concluded their enquiriesinto the lock in of home insurance with a mortgage. An announcementpreventing the procedure is Mr Sissonsgoes on saying that even though providers may not demand that customers take out life insurance , they can be persuaded that they do not have a choice, through the provider being economical with the truth.
48 per cent of life insurance is sold by mortgagelenders, although it can be purchased through independent advisers or direct providers.
However a Department of Trade and Industry spokesman has said that their enquiry continues into a huge range of insurance tie-ins. A provider who met Geoff Hoon has said that life insurance has been given a fleeting look, while more importance has been centred on home insurance.
The trouble with consumers being forced to buy uncompetitive life insurance and home and contents insurance policies is just as important for both commodities.
The concerns are doubly acute with PPI. About half of all customers who have been swayed into taking out a payment protection insurance may have been provided with the wrong product. Plus the majority of those who purchased one of these debatable policies expect a lot more than they would actually receive if they could not pay their bills.
A wide-reaching investigation has found that approximately 25 per cent of people think that they will get a monthly income from their Payment Protection Insurance policy, not understanding that the insurance would only cover their debts.
Another 20 per cent said they understood the insurance would cover them if they could no longer meet their repayment obligations for any reason, and 8% said they thought| their medical bills would be paid for if they were to taken ill.
Many people thought the policy would carry on indefinitely to cover their ongoing debts, others thought their insurance would cover breakdowns and living expenses.
Yearly sales of Payment Protection Insurance policies are said to generate payments of around 6.4 billion pounds for the insurance business. However a stunning 4.5 billion pounds of this is said to be sheer profit. Analysis suggests that a few banks can charge up to 500 per cent more than others for similar.
The OFT is examining the sale of Payment Protection Insurance following complaints from the National Consumer Council and Citizens Advice. It recently empasized concerns that banks are luring in customers by advertising seemingly cheap loans and then hammering them with huge extra costs by selling pricey Payment Protection Insuranceas part of the transaction.
As a result, a loan which may appear to provide good value ends up being much more expensive.
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