Summary
Some of the ways in which the insurance market is tackling mis-sold life insurance policies. The problemslinked to payment protection policies are emphasized.

The mis-selling of life insurance policies by a significant amount of mortgage lenders has to be attended to by the Government. Action has been taken by the DTI, who have just about finished their investigationinto the tie in of home and contents insurance with mortgages. An announcementpreventing the procedure is Mr Sissonscarries on that even though lenders may not demand that customers take out  life insurance, they can be persuaded that they do not have a choice, through the provider being evasive with the truth.

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

Then again a Department of Trade and Industry spokesman has said that their investigation continues into a large range of insurance lock ins. A provider who met Jack Straw has said that life cover has been glanced at, while more emphasis has been focused on home and contents.

The problem with customers being pressured into buying noncompetitive life cover and home and contents insurance plans is equally significant for both products.

The problems are even more severe with PPI. About 1/2 of all consumers who have been persuaded to take out a payment protection insurance may have been provided with the wrong product. In addition the the greater part of those who bought one of these debatable policies expect much more than they would in truth be given if they were unable to pay their bills.

A wide-reaching study has brought to light that  approximately 26% of people think that they will earn a monthly wage from their PPI policy, not understanding that the insurance would only cover their debts.

Another 20 per cent said they thought the insurance would cover them if they if they were unable to meet their repayment commitments for any reason, and 7 percent said they thought their medical bills would be paid for if they were to taken ill .

Several people thought the policy would go on indefinitely to meet their debt repayments, others thought their insurance would cover breakdowns and living expenses.

Annual sales of PPI policies are said to make payments of about 5.4 billion pounds for the insurance business. However an amazing 4 billion pounds of this is said to be out and out profit. Investigations suggest  that several banks can charge up to five hundred per cent more than others for a comparable product.

The Office of Fair Trading is investigating the sale of Payment Protection Insurance following complaints from the National Consumer Council and Citizens Advice. It recently highlighted concerns that banks are tempting customers by advertising seemingly cheap loans and then hitting them with large additional costs by selling pricey Payment Protection Insuranceas part of the deal.

As a result, a loan which seems to offer good value can end up being far more costly.