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Some of the ways in which the insurance industry is dealing with the mis-selling of life insurance. The problemsrelating to payment protection policies are emphasized.

The mis-selling of Life Insurance  cover by a substantial number of mortgage providers has to be attended todealt with|tackled} by the Government. Action has been taken by the Department of Trade and Industry, who have practically concluded their investigationinto the tie in of home and contents insurance with mortgages. An announcementbarring the procedure is to be expected very soon.

On the other hand some senior figures in the insurance market have criticised the investigation for overlooking the selling of life insurance. The criticism centres around the practise of overcharging for life insurance, while not offering plenty of choice of productsgoods as part of their mortgage packaging. Simon Greg, the independent financial adviser, says that the DTI’s understanding of mortgages fall short of the criteria wanted to make their investigation credible. The result being that life cover has been ignored.

Mr Times thinks that just as some mortgage providers have been called to account for locking in home and content cover to a mortgage, so should the sizeable amount of mortgage providers who misinform consumers intothinking that they have to take out life cover with their mortgage. Mr Bolgercarries on that although providers may not insist that clients have life insurance , they can be persuaded that they do not have a choice, through the lender being ambiguous with the truth.

60% of life cover is sold by mortgageproviders, although it can be bought through direct providers or independent advisers.

However a Department of Trade and Industry spokesman has said that their enquiry continues into a huge range of insurance tie-ins. A lender who met Edward Milibrand has said that life cover has been glanced at, while more emphasis has been centred on home and contents.

The problem with customers being pressured into buying noncompetitive life insurance and home and contents insurance policies is just as significant for both commodities.

The concerns are doubly severe with payment protection insurance. As much as half of all customers who have been swayed into taking out a payment protection insurance may have been sold the wrong the wrong kind of policy. In addition the the greater part of people who bought one of these suspect policies expect much more than they would in truth collect if they were unable to pay their bills.

A wide-ranging investigation has brought to light that approximately 26 per cent of people believe that they will be paid a monthly wage from their Payment Protection Insurance policy, not understanding that the insurance would only cover their debts.

Another 15% said they understood the policy would cover them if they could no longer meet their repayment obligations for any reason, and 7% said they believed tha| their medical bills would be paid for if they suffered ill health.

Several people thought the policy would carry on indefinitely to meet their outstanding debts, others thought their insurance would cover breakdowns and living expenses.

Yearly sales of PPI policies are said to produce payments of about 5.3 billion pounds for the insurance industry. However an astounding £4bn of this is said to be out and out profit. Studies suggest that a number of banks charge up to 600% more than others for a comparable product.

The OFT is investigating the sale of PPI following objections from Citizens Advice and the National Consumer Council. It recently pointed out concerns that banks are luring in customers by advertising seemingly cheap loans and then hammering them with huge extra costs by selling pricey PPIas part of the transaction.

As a result, a loan which may appear to provide good value turns out to be far more expensive.

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