In these cases the mortgage protection insurance premium is expressed as £’s per £100 of the loan repayment amount. For example if the premium rate is £5 per £100 of loan repayment, and the monthly repayment is £300, then the monthly premium is £15.
Premiums calculated in this way are paid monthly and either paid to the lender who passes the premium on to the insurer, or paid direct to the insurer, usually via direct debit, under what may be a separate arrangement.
The regular repayment method is used by most mortgage and loan protection insurance taken out on a stand alone basis. Stand alone arrangements’ need not be purchased at the same time as the loan or mortgage and can be used to finance various types of credit arrangement such as personal loans and motor finance agreements, assuming always that such insurance has not already been included in the loan arrangement.