Summary

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

The mis-selling of Life Insurance  cover by a considerable number of mortgage providers has to be addresseddealt with|tackled} by the Government. Steps have been taken by the Department of Trade and Industry, who have almost completed their investigationinto the tie in of home and contents insurance with a mortgage. A press releaseforbidding the procedure is expectedcontinues by that although lenders may not demand that customers take out life insurance , they can be convinced that they have no choice through the lender being ambiguous with the truth.

60% of life insurance is sold by mortgageproviders, however it can be bought through independent advisers or direct providers.

However a DTI spokesman has said that their enquiry carries on into a huge range of insurance lock ins. A provider who met Edward Milibrand has said that life cover has been given a fleeting look, while more emphasis has been placed on home insurance.

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

The problems are even more acute with payment protection insurance. As much as half of all clients who have been persuaded to take out a payment protection insurance may have been provided with the wrong product. Plus the the greater part of individuals who bought one of these debatable policies expect much more than they would actually collect if they could not pay their bills.

A broad study has brought to light that around 25% of people think that they will receive a monthly wage from their Payment Protection Insurance policy, rather than understanding the policy would only cover their debts.

Another 15% said they believed the insurance would cover them if they if they were unable to meet their repayment commitments for any reason, and 7 percent said they believed tha| their medical costs would be paid for if they suffered ill health.

Several people thought the policy would keep going indefinitely to meet their debt repayments, others thought their insurance would cover breakdowns and living expenses.

Yearly sales of PPI policies are said to make payments of around five billion four hundred thousand pounds for the finance industry. However a staggering 3 9 billion pounds of this is said to be pure profit. Investigations suggest that some banks can charge up to 600% more than others for the same product.

The Office of Fair Trading is studing the sale of PPI preceding complaints from Citizens Advice and the National Consumer Council. It recently empasized concerns that banks are attracting customers by advertising deceptively cheap loans and then hammering them with massive extra costs by selling pricey Payment Protection Insuranceas part of the transaction.

As a result, a loan which appears to provide good value can end up being far more costly.