Taking Insurance

Don't take out insurance you don’t need. Lenders always want to make money out of their borrowers. And apart from high interest rates they also try to do it by selling insurance on most loans. The policies promise to cover your repayments until the end of the term if you lose your job or are too ill to work. Sounds good? Consumer groups say it can be, until you come to claim. Small print means many borrowers find they get no benefit from the policies when they need it – with self-employed people most likely to fall through the net. Yet the cost of the cover is high – it can turn a £155 monthly repayment on a £5,000 loan to £180. If that’s worth paying for you’ll want to be absolutely certain that the policy will protect you. So don’t be pushed into signing without reading the details carefully. You should get a cooling-off period after taking out the loan when you can cancel the insurance if you spot something in the small print you don’t like. Take advantage of it if necessary.