Payment Protection

jd

Hi
I was on to BOI for a loan. The guy at the end of the phone included payment protection.
Is this generally worth it?

More particularly, I will probably pay off the loan in a much shorter timeframe than specified in the agreement.

In other words, say the loan is for 12k. Then the amount adavanced on the loan agreement is down as nearly 13k. The agreement is for 36 months. Am I paying the extra 1k even if I have te loan paid off within 6/7 months? Is the rep chasing commission?
jd

BuffyBot

Is the rep chasing commission?

I don't think they get paid commission for it - when I worked in lending in a bank, I didn't. Can't say for certain that is the case in BOI though. However, it is offered to everyone so it may be a requirement on the part of the banks to offer it - pretty much any form of credit I've applied for in Ireland and the UK has payment protection mentioned.

Again from my own experience, refunds were given on a pro-rata basis to those closing loans early, and is factored into the closing balance you would get when you are closing the loan. Again, BOI may differ.

It doesn't effect your chances of getting the loan if you decline, btw.

Victor

In other words, say the loan is for 12k. Then the amount adavanced on the loan agreement is down as nearly 13k.

!

I think BOI do pay some commission / bonus to their own staff, although not as much as an insurance broker. I think the commission on my pension was something like €126.

If you are comfortably able to pay the loan back and it is asset backed, are you sure you need PP?

MG

If you are paying it off within 6 or 7 months the liklihood is that you don't need it but there may be exceptions such as if you believe your job to be in jeopardy or have a history of illness etc. For the most part it is dead money.

Last time I bought a car I got it but after about a year I found myself with enough cash to pay off the loan. After considering investments, I reckoned that saving the interest (9% or whatever) on the car loan was a guarenteed investment return. When I worked out the interest I saved I was very happy and even happier when I realised I had saved even more in payment protection insurance.

Next time I buy a car I will be reluctant to take this insurance if I can avoid it at all.

shoegirl

PP is only worthwhile if you are an employee who is at risk of being made involuntarily redundant. So if you are self employed, a contractor or in the public sector its a complete waste of time. Also you must become involuntarily unemployed in order to claim.

It might be worthwhile if there is any question over your job, otherwise not.

Victor

shoegirl wrote:

PP is only worthwhile if you are an employee who is at risk of being made involuntarily redundant.

I would use phrasing closer to "involuntarily incomeless" - there are other factors, accident, longterm illness etc.

RainyDay

shoegirl wrote:

PP is only worthwhile if you are an employee who is at risk of being made involuntarily redundant. [...] It might be worthwhile if there is any question over your job, otherwise not.

There is a bit of a Catch-22 problem here - If you aware of specific threats/risks to your job at the time that you take out cover, then you will not get cover for this loss, as insurance is designed to cover for unknown events only.

fintan

I wouldn't bother with payment protection, its just an easy way for the bank to make a little extra profit off your loan. Think of it this way, if they didnt think you could pay it back, they wouldnt give you the loan.

MG

jd wrote:

Hi
I was on to BOI for a loan. The guy at the end of the phone included payment protection.
Is this generally worth it?

More particularly, I will probably pay off the loan in a much shorter timeframe than specified in the agreement.

In other words, say the loan is for 12k. Then the amount adavanced on the loan agreement is down as nearly 13k. The agreement is for 36 months. Am I paying the extra 1k even if I have te loan paid off within 6/7 months? Is the rep chasing commission?
jd

There was a guy on five seven live talking about shopping around for loans last week On the subject of payment protection he said to shop around and that it can be a large cost on top of a loan. Philip Boucher Hayes asked if it was necessary - the guy said it CAN be a valuable product. His tone of voice suggested that is is valuable in some circumstances only. My take on this was that it is far from a necessary product but occasionally it might be worth it.

Our man in Havana

RainyDay wrote:

There is a bit of a Catch-22 problem here - If you aware of specific threats/risks to your job at the time that you take out cover, then you will not get cover for this loss, as insurance is designed to cover for unknown events only.

How can they prove you knew? I am in a permament job but I don't consider myself particularly secure, particularly with call centres moving to india etc.

RainyDay

Bond-007 wrote:

How can they prove you knew? I am in a permament job but I don't consider myself particularly secure, particularly with call centres moving to india etc.

I don't think general concerns about industry trends would count as 'specific knowledge'. If however there have been company announcements about possible future redundancies, cover would probably not apply. When it comes to processing a claim (or even a few claims if it is a large company), they will leave no stone uncovered to find a reason NOT to pay out.