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Yorkshire Bank Loan Protection

It has been hard to avoid news stories regarding mis sold PPI in recent times. What started as a complaint by the Citizens Advice Bureau has expanded into a huge scandal. Numerous failings have been uncovered across the lending world and payment protection insurance claims are at an all time high.

If you have taken out a mortgage or loan in the last ten years then you were probably also offered loan protection cover. This type of insurance is designed to cover debt repayments if the borrower is unable to work as a result of ill health, accident or involuntary unemployment. The problem with Yorkshire Bank loan protection, and other similar covers, is that they do not always offer the level of protection customers expect.

A 2008 survey by the Competition Commission found that just 28% of customers who tried to use their mortgage payment protection cover received a payout. The figure for loan insurance was just 15%. This suggests that as much as 72% of mortgage PPI customers and 85% of loan insurance customers may be paying for cover they would not be able to use. One suggested reason for the high level of rejections is that most loan protection policies have a high number of exemptions. These are circumstances that are not covered by the policies.

Another issue connected with loan insurance is the high cost of the cover. Policies generally cost in the region of 13-25% of the loan value. On a loan of £15,000 this could add between £1,950 and £3,750. Taking out loan insurance can, therefore, significantly increase a customer’s overall debt and lead to a longer repayment period. The loan insurance will also attract interest at the same rate as the base loan.

If you do not feel your lender explained the exemptions or full costs of your Yorkshire Bank loan protection policy to you in full you may be entitled to make a claim for mis-selling. To find out more call 0207 471 2000.

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