Loan Protection Insurance, or LPI, is a type of insurance meant to help you cover your loan repayments in the event you can no longer afford to pay them yourself. It is essentially the same as Consumer Credit Insurance (CCI).
What Does It Cover?
Different policies will have a different level of cover, but typically Loan Protection Insurance is designed to cover your mortgage or personal loan repayments in the event of involuntary unemployment, disability or a serious injury.
There are a lot of factors that contribute to the level of cover you can receive, such as your loan balance, the period of time your policy covers and your personal circumstance at the time of purchasing the insurance.
You should make sure to look at your product disclosure statement to see what you are covered for. The policy may not even cover the full amount of your repayments, or may only cover you for 12 months.
Do I Need It?
It is important to consider your own personal circumstances before you decide whether or not to buy any insurance product. It is also important to get financial advice from multiple different trusted sources.
If you already have an insurance policy, such as life insurance or income protection insurance, you may not need any additional policies.
If you don’t have any existing policies, it may be beneficial to consider an LPI in the event you are unable to work and pay off your loan. However, always make sure to double check your eligibility and assess the value the product brings for you.
Typical Mis-sells To Look For
Unfortunately, it is common for salespeople to mis-sell LPI to people when they are signing up for a personal loan. In order to avoid a mis-sell, here are a few key things to look out for when being sold insurance;
- The salesperson is extremely pushy about the product
- You were told the policy is mandatory to secure your home loan
- You weren’t eligible to claim at the time of purchasing the insurance i.e. unemployed, casually employed, pre-existing disabilities and medical conditions
- The policy was hidden in your paperwork without your knowledge
- The insurance was sold as part of a package deal, rather than a seperate, individual product
- The policy was not properly explained to you, and you were not provided with adequate paperwork
- You were sold the insurance even though you were already covered by a different policy
If you feel like you have been a victim of a mis-sell, contact the team at RTR to begin your claim process. We work on a no-win, no-fee basis. You have nothing to lose and everything to gain!