Loan Insurance...

Orville

Can someone confirm that when you take out loan protection insurance that it covers you for the entire period of the loan. When i say this i don't mean that you can claim on the insurance and they have to pay it for the whole of the loan, but you can put in a claim on any day right upto the last day of the loan..?

I'll explain a bit more.

About 3 years ago now i took out a 36 month loan with Alliance Leicester paying £540 a month including insurance. Now the maximum period i could claim on the insurance within the term of the loan was upto 18 months. After two years of paying the loan i was made redundant with 12 months left to pay and put in a claim on the insurance. The claim was accepted and payments have been made. Last month was my last month of the loan. I sent the form off like i had been doing expecting the payment to be made and i'd soon receive a letter saying the loan had now been paid in full and has finished.

Instead of this i get a letter from the insurance saying that the payment for that month is only £480. Hmm i thought that can't be right as it should be the usual amount of £540. So i phone them up and ask why there is a shortfall in the payment. They search their systems and say that they have it on their system that my loan ends on the 22nd of the month and not the 28th, hence the shortfall in the payment. I ask how they have that on their system and they say it's from the bank and to call them. Sooo i call the bank whom say that my loan insurance ends on the 22nd and my loan ends on the 28th. Hang on i said to the guy, when i took the insurance i took it out for the entire period of the loan not 35 months + 3 weeks, it was to cover every payment etc. This is when he starts to get a bit argumentive and says i have to call the insurance company and get them to sort it. Hang on i said no i am not going to do this as it's your system that has told them the insurance ends before the loan so it's a !!!! up your end. Anyway the argument get a bit heated and he insists i owe the shortfall and have to pay it. I flatly refuse and say no way the insurance covers it. Anyway after a stalemate he says he is going to escalate it and someone will call me back.

Can you guys confirm that the insurance should pay in full as it can be claimed on at any time within the entire period of the loan.

di3004

Hi there

Hopefully someone will come along and know more about these matters but insurances can vary.
Do you have the copy of the policy cover for this loan?

If not they should supply them free of charge, check them out when you have these.

Some loans insurance covers up to about 12 months in a row, that is mainly stand alone insurance. It should cover the full monthly repayment.
But for example if say the customer became unemployed for 3 of those months, they should pay out to cover the whole loan amount for that period, and when returning to new employment it ends, but there may be a period say about 3 months in a row before you can make another claim, for eg: sickness.

Other insurances for eg: say a loan for 10 years, the cover may only protect for 5 of those years, but yet you would still be paying for the life if the loan - these type I believe they have stopped selling now, and most of these are cashback ppi if no claims have been made in those first 5 years.

But as stated they can vary, but to my knowledge should cover for the monthly repayment on that loan.

I am sure someone on here can explain your query better than me with more detail/

Good luck.

jonesMUFCforever

When did you first make the claim?

Was it on the exact due date or about a week before? - which would explain why the last payment was short.

Orville

jonesMUFCforever wrote: »

When did you first make the claim?

Was it on the exact due date or about a week before? - which would explain why the last payment was short.

The insurance runs for upto 18 months. i made the claim with just 12 months left of the loan term, 13 months at most.

jonesMUFCforever

Yes but exact dates are important eg you pay £300 per month say, so approx £10 per day - you get made unemployed in middle of month so only eligible for half the first month's repayment £150 (or in this case the last payment).
Sorry if I did not explain myself clearly.

Orville

jonesMUFCforever wrote: »

Yes but exact dates are important eg you pay £300 per month say, so approx £10 per day - you get made unemployed in middle of month so only eligible for half the first month's repayment £150 (or in this case the last payment).
Sorry if I did not explain myself clearly.

I can't be exactly sure when i first made the claim. But i fail to see how that would affect it as you have to carry on making payments untill the insurance is first paid so there are no gaps. How would that effect the end of the policy

Apples2

Orville wrote: »

How would that effect the end of the policy

Sounds to me like the insurance runs for up to 18 Months, the LOAN runs for 36 Months

You seem to be expecting the Insurance to pay the 36th payment, and also dip into a non existant 37th Month payment to make up a shortfall.

This shortfall being caused by the date of first claim which jones has been trying to prise out. They only paid a part Month (from the date of claim, not that whole month where you were working through most of it).

If you want a definite answer, you have to get all the facts together and KNOW the dates in question instead of going off half cocked.

It is of no use saying 12, 13 at most. Get the dates together

Orville

Apples2 wrote: »

Sounds to me like the insurance runs for up to 18 Months, the LOAN runs for 36 Months

You seem to be expecting the Insurance to pay the 36th payment, and also dip into a non existant 37th Month payment to make up a shortfall.

This shortfall being caused by the date of first claim which jones has been trying to prise out. They only paid a part Month (from the date of claim, not that whole month where you were working through most of it).

If you want a definite answer, you have to get all the facts together and KNOW the dates in question instead of going off half cocked.

It is of no use saying 12, 13 at most. Get the dates together

Hi.

No i don't expect the insurance to go into the 37th month at all. How could it, it is only a 36 month loan..?.

I was made redundant at the end of June 09. I immediately put in a claim on the insurance. i had to pay a month out of my own money while the claim was processed etc. My claim can payout for a maximum of 18 months within the 36 month loan term. So for example if i had been made redundat 2 months into my loan i would have been able to claim for the next 18 months but after that for the remaining 16 months i would have to pay that myself..

My argument is that when i took the loan out, i took the insurance out at the same time with the understanding it could be claimed on at any point within the loan term. So as i claimed with less then 13 months remaining on my loan, my insurance should cover me right up till and including the last day of the loan. For some bizarre reason they are saying my my loan cover is for a shorter period then my loan. The insurance companies don't pay on a monthly basis as far as i am aware they pay it on a daily basis, or that is what i was told by one of my creditcard companies i was claiming from. I would assume the same would apply to loan insurance.

jonesMUFCforever

No it won't as they will pay you for the exact number of days as a % of the loan payment.

Orville

jonesMUFCforever wrote: »

No it won't as they will pay you for the exact number of days as a % of the loan payment.

I am sorry i still don't get where you are coming from. if they had started the claim half way through the month, wouldn't the first payment be short as the loan day is the 28th..?. From then on all payments would have been for the full month.

jonesMUFCforever

Orville wrote: »

I am sorry i still don't get where you are coming from. if they had started the claim half way through the month, wouldn't the first payment be short as the loan day is the 28th..?. From then on all payments would have been for the full month.

No the other way round! The last payment would take into account when the first claim was made.