loan insurance

[horselady]

Can I have some views please? 4 years ago I took out a loan with Lloyds TSB, this was covered bu insurance. For the past 3 months I have been claiming because of sickness. The insurers have phoned me today to tell me that the loan will finish on 26 April so only half the amount of insurance will be paid for the last month. Thing is on 1 May the last loan payment will be taken from my bank and it will be a whole month, when I queried this, they explained that when I took out the loan, insurance started immediately, whereas the first loan payment was not taken from my account until the 1st of the next month, in other words making the insurance period end before the loan ends. Am I right to feel aggrieved? After all I hardly needed insurance cover at the start when I hadn't paid anything, but now I'm not working and will have to find �210 to pay the bank the last bit of the loan.

[buildersmate]

It seems a fair point that you make. So worth checking the small print of your insurance policy or get the CAB to do it for you, but I suspect there will be clause in there that does not help your case. You will appreciate that interest clocks up daily and at the end of the first month, you are due to pay an amount that pays off the interest accrued plus a bit of the loan and this continues throughout the loan period, each month. As the loan period comes to and end, the amount of interest is reducing and the amount of loan paid off each month is growing. To me that doesn't change the fact that you were unwell in the last month during which a liability to pay a sum was there, but the payment is only made at the end of the month (1st May). So it doesn't make sense that the insurance policy voids the final month. However look for that small print.

[Loosehead]

Feel a little peeved but take some blame yourself, you are allowed to read the paper work before signing it. You could have insisted that the dates coincide. Congratulations by the way, It's extremely unusual for them to pay at all on these loan insurance policies, they nearly always find a way to get out of it so I suppose you've had a result.

[horselady]

Thanks to you both for your replies. I have read through the small print and there is nothing that makes it clear that this could happen. Thing is, this is the sort of thing I deal with all the time when I'm working but feel completely unable to deal with now I'm unwell. I may pursue it if I have the energy or I may just pay it and forget it. Thanks anyway.

[themas]

It sounds to me as if you were mis-sold the insurance. It clearly should have been set up so the end dates coincided. You should go through Lloyds comp[laints procedure, & to the Ombudsman if necessary.