Money Grouse: Confusing insurance offer follows loan by Citroen Finance

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SIGNING up for a loan can bring unwelcome and confusing offers from insurance companies, as Independent journalist Jason Nisse has discovered.

He recently bought a Citroen car with a loan arranged through Citroen Finance, the car manufacturer's finance organisation.

This week he received an official-looking document emblazoned with the Citroen logo. It was addressed personally to him and was headed 'Citroen Finance Protector Proposal'. It included details of his monthly loan repayment of just under pounds 397, a figure for a monthly Finance Protector Premium of pounds 32.74, and a direct debit form. A deadline of 8 April was given for signing up, flagged in bold type with the words 'PS Important'.

At first Mr Nisse thought the debit was an essential part of his loan agreement, but then had second thoughts and telephoned a London office of Citroen Finance.

'The woman on the switchboard said it was an insurance offer and that it was not connected to the loan. She said it was a very badly worded form and they were investigating. She also said it was nothing to do with Citroen.'

Mr Nisse thought he had had a lucky escape.

The origins of the mailshot were not quite so sinister but not exactly comforting, nevertheless.

The insurance policy offered to Mr Nisse turns out to be an official Citroen product. It covers monthly repayments on the finance agreement if the borrower is ill for more than two weeks. It pays off the loan if the borrower dies.

The premium of pounds 32.74 quoted to Mr Nisse compares with pounds 27.80 payable for pounds 400 of mortgage payment insurance from Abbey National. The mortgage protection policy has less generous terms for sickness benefits, however. Bill Jeffries, sales director for Citroen Finance, said that Citroen dealers were encouraged to offer the policy to car buyers. Borrowers who did not sign up were sent follow-up mailshots by the insurer underwriting the policy, Consolidated Insurance Group. Citroen's finance agreements included a clause allowing the company to send out such marketing literature.

Mr Jeffries denied that this was hard selling. Some aspects of the mailshot had been changed about six months ago but he claimed there had been no more complaints about this than any other routine mailshot.

Citroen receives commission for selling the policies but Mr Jeffries declined to say how much.

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