The Post Office has applauded the Which? research highlighting underhand sales tactics where by payment protection insurance is automatically added to a loan, but is not compulsory.
Post Office head of communications Claire Oldstein says: “Many customers have little understanding of payment protection insurance and some do not even realise they have this insurance in force. Others, who have been at the hands of aggressive sales tactics, can feel they have no choice but to take the expensive policy tied to a loan or credit card if they want their application to be accepted.”
Customers with personal loans that include payment protection insurance could get a significant refund if they seek a better protection deal and switch, according to the Post Office.
A customer with a loan of 7,500 over 5 years could receive a refund of 1500 if they cancelled their loan protection, but kept the loan in place. The refund is a portion of the insurance premium that was charged upfront and added to the loan amount, and can be paid either by reducing the customer’s monthly loan repayments or as a lump-sum refund.
The Post Office is urging customers to challenge their loan provider to find out the true cost of their payment protection and compare this to better value standalone deals on the market.
The Post Office Lifestyle Protection product can be used to protect up to 60% of gross monthly income up to a maximum of £2500, covering all outgoings for 12 months rather than a specific debt.
Income protection: News update: May 2007
