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Income protection better for unsecured loans

Income protection better for unsecured loans

Category: Loans

Updated: 02/02/2009
First Published: 02/02/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Unsecured loans holders have been advised to consider income protection to provide security.

Consumer campaign group Which? suggested that this could be more effective than payment protection insurance (PPI), as these policies only cover the loans themselves.

According to personal finance campaigner Lucy Widenka, income protection "will protect not just a loan but will help protect mortgage payments", as well as "other debt that you might have like credit cards".

She added that consumers who find they are struggling due to a loss of income will continue to be able to purchase basics such as food if they take "a more holistic approach".

Ms Widenka's comments come following last week's findings by the Competition Commission that lenders face little competition when offering PPI.

It concluded that such policies should not be sold within seven days of unsecured loans being granted, in order to allow borrowers to make comparisons.

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