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Loan protection insurance has seen many problems, which has led the Financial Services Authority to set out recommendations to improve communication and selling in the sector. Some changes have already been put in place as a result of the recommendations and more are in the pipeline, with the forthcoming introduction of comparison tables in March this year.

It is thought that with the introduction of the tables protection policies will become more transparent, and so consumers will be less confused and less likely to buy an unsuitable policy. Currently consumers often misunderstand payment protection products and don*t know exactly what their policy will deliver. For example, many do not realise there are exclusions in a policy that can stop them from being eligible to claim. However, the tables will highlight the exclusions, make the consumer aware of how much the cover will cost and, through question and answers, allow them to choose a suitable policy.

For now the best way to take out cover is to go to an independent specialist for your quote. A specialist will offer a quality policy along with information regarding the exclusions and other vital facts about the policy you are considering taking out. It is vital that the exclusions are taken into account and read with great care. General exclusions include suffering from an ongoing illness, being of retirement age or only working in a part-time position. However, sometimes the exclusions may not apply * for instance, providing you have not suffered from the illness within the past two years then you could still benefit from taking out cover. The provider may include other exclusions so you have to check the terms and conditions of each individual quote.

The quotes an independent provider can give could save you up to 80% on the cost of a policy in comparison to the high street lenders. The cover taken out will also be a quality product that is backed up by experience in selling payment protection. Generally loan cover will start to provide a tax-free income from one to three months of being unable to work. You have to continually be unable to attend work with no break in between. Once you have started to receive the benefit it would carry on, providing you with peace of mind for between 12 to 24 months, depending on the policy terms. In the majority of cases this is enough time to recover from your illness or accident or to find work.

Loan protection insurance has received a bad name since the Office of Fair Trading revealed that policies had been mis-sold. Faith in all payment protection products was lost and there was a decline in policies sold. However, without a back-up plan to fall back on if you should lose your income, added stress can delay your recovery and make the job hunt more pressured, and you may end up with a bad credit rating that affects your future financial options. Loan protection can work well, providing the policy suits your circumstances. It is important to realise that the product is not faulty; it is those lenders selling policies despite having little or no experience in the sector that create problems.