Loan protection insurance is cover that makes, or helps make, your loan repayments if you cannot: usually because of illness, injury or losing a job, and in some versions because of death. In the UK it is more often called payment protection insurance (PPI), and a version that pays off a balance if you die is what people mean by credit life cover. To see what exists today for a particular loan, leave your number in the form here; an adviser firm authorised by the FCA phones back, and the call costs nothing.

This page sets out what the product is, what the regulator and the lenders themselves say about it, and what to ask before you buy or keep one. It does not rank products or say whether one is worth having; that question has its own page.

What do loan protection, payment protection and credit life mean?

The three names overlap, so it helps to split them by what triggers the payment:

  • Payment protection (PPI) pays towards the repayments when you cannot work because of an accident or illness, or when you are made unemployed. The FCA says it "was designed to cover your repayments for a time if you couldn’t pay yourself".
  • Credit life pays when the borrower dies, clearing or reducing what is still owed. In the bank booklet used as an example below, it is the life element inside a credit card repayment policy rather than a product of its own.
  • Loan protection is the everyday label for either or both, attached to a personal loan, car finance or a credit card.

None of these is life insurance in the sense of a family payout. If the aim is to leave a lump sum for a mortgage or other loan, that is mortgage life insurance; decreasing term cover, one form of it, is covered further down as an alternative. If the aim is a replacement income while you are ill, that is income protection, which pays a share of earnings instead of tracking a debt.

How does a policy work in practice?

MoneyHelper's guide to insuring against redundancy, in the last copy that could be read (archived June 2025, so check the current page), says payment protection on a loan or card "helps you keep up your loan repayments by paying out a set amount for up to 12 or 24 months". It adds that this cover "generally only covers your loan or mortgage repayments, not your income".

The terms differ by policy, so one real booklet is worth looking at. Lloyds Bank's Credit Card Repayment Cover booklet (information correct as of April 2026) is a product now held by existing customers only. It sets these terms:

  • To be eligible at the start you must be "aged 18 or over but under 75" and working.
  • Sickness claims have a minimum: "If you have an accident or get sick and this lasts for less than 15 days in a row you’ll not be able to claim under this cover."
  • Unemployment cover applies to someone "working and aged under 70" who becomes unemployed for 15 days in a row.
  • On death, "you die during the period of cover, we will pay the outstanding balance", and "life cover ends when you reach the age of 75".
  • The premium is only charged "when there is an outstanding balance on your agreement".
  • On who is paid, the booklet states: "Your monthly benefit or outstanding balance will be paid directly to the lender of your agreement."

That booklet belongs to one bank and one card product. Another lender's loan policy can have a different waiting period, age limit or maximum claim, and the schedule you were sent states yours.

What happened with PPI, and what has the FCA said since?

The FCA's consumer page on PPI complaints (last updated April 2025) says it was often sold with credit cards, store cards, mortgages, home improvement loans, business loans and student loans, that sales began in the 1970s and peaked between 1990 and 2010. Its finding was blunt: "we identified widespread poor sales practices", and it was "sold too widely among consumers, many of whom didn’t really need it".

The regulator set a deadline of 29 August 2019 for complaints to the firm that sold the policy. By April 2021, it says, refunds to customers had passed £38.3 billion. The deadline does not apply to everyone: a complaint can still be made in some circumstances, for example if the PPI was bought after 29 August 2017, and the FCA says the deadline does not apply to the courts. It notes that complaining yourself is free, that claims companies charge a fee for doing it for you, and that anyone claiming to be able to get you a PPI refund should be treated with caution.

The same page states: "You can still buy PPI, or other types of income or short-term protection insurance." The history is the reason a careful reader asks where a policy came from, what it costs and whether the lender or a separate insurer is behind it. Redundancy and short-term cover are handled on income protection and redundancy.

Who sells loan protection today, and can you buy it online?

Two high street banks say they have stopped. Lloyds Bank says on its PPI page: "Lloyds Bank no longer sells PPI", and Bank of Scotland says the same of itself; both pages are for existing customers and point to MoneyHelper for alternatives. Whether a particular lender or insurer offers loan cover online, by phone or not at all is something to ask that lender or a broker directly, naming the loan and the kind of cover (accident, sickness and unemployment, or life-linked) you have in mind.

MoneyHelper's advice, from its June 2025 copy, is that "it’s important to never buy it automatically from your loan or mortgage provider". Where cover is on offer, ask whether it is optional, who the insurer is, and whether you can cancel; Lloyds' booklet, for one, says "you’ll not receive a refund of any of your monthly premium" when you end it.

Unsure which kind of protection fits a loan you hold? Our quote form leads to a phone call from a broker who can go through the options with you. Prices are a separate question, answered on what loan protection costs, and buying routes for mortgage cover are on where to buy mortgage protection.

What should you check before relying on a policy?

Exclusions and conditions decide whether a payment is made. The points to find in your own documents are these:

  • Who counts as unemployed. In the Lloyds booklet a claim fails if "your work ends voluntarily during a period of notice given to you by your employer or you become voluntary redundant".
  • Waiting periods. Under the same booklet, sickness or unemployment lasting less than 15 days in a row cannot be claimed for; your own schedule sets your policy's rule.
  • Age limits. That booklet sets separate limits for joining (under 75), unemployment cover (under 70) and life cover (ends at 75).
  • Whether you already have it. MoneyHelper says: "Ask your lender whether your mortgage, loan or credit card is covered by insurance." Policies sold years ago can still be running.
  • What it pays. As the June 2025 MoneyHelper wording quoted earlier says, this cover generally tracks the repayment rather than your wage, and pays for a limited number of months.

Can decreasing term life insurance cover a loan instead?

For the death part of the risk, some people use decreasing life cover. Aviva's life insurance page (WC05632, September 2026) presents decreasing cover as a way for your family to clear a repayment mortgage or a long-term loan if you die within the term, and Royal London's consumer page pitches it at a repayment mortgage or some other debt. How the amount falls, and why it is matched to a repayment loan rather than an interest-only one, is explained on the decreasing term page.

It does not pay if you are ill or lose your job, which is the gap payment protection was built for. Adding illness cover is a different product again, as with critical illness cover. For a business borrower, business protection covers loan-related options.

To have decreasing cover looked at against a specific loan, a broker can ask insurers on your behalf after you send the form here, with no charge for the call. The wider picture of how life policies work is in how life insurance works.

Frequently asked questions

What does credit life insurance mean?

It is cover that pays the outstanding balance of a debt if the borrower dies. In the Lloyds credit card booklet above, the life element pays the outstanding balance if you die during the period of cover, and that payment goes to the lender.

Is loan protection the same as payment protection insurance?

The terms are used interchangeably for cover linked to a loan, card or mortgage that pays when illness, injury or unemployment stops you working. Check the policy's own name and its list of what triggers a payment.

Is credit life insurance a good idea?

That depends on the policy and your circumstances, so it is outside what this page can say. The FCA found PPI was often sold to people who did not need it, and the worth-it page sets out the questions to weigh.

Does life insurance cover my loan payments if I am ill?

A life policy pays on death, not illness. Payments during illness are the job of income protection or payment protection.

Can you get a loan protection insurance quote online?

Lloyds Bank and Bank of Scotland both say they no longer sell PPI. For any other lender, ask the lender or a broker what is available for your loan and how it can be arranged.

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