Exclusive - Lloyds TSB has changed its loan protection insurance to include differential pricing and total loan cover

The changes mean products will be priced to reflect a customer's risk profile and will pay out the full amount of the loan throughout the term of that loan, said Lloyds TSB.

Lloyds TSB Insurance managing director Phil Loney said: "We are trying to deal with these issues in the spirit of treating customers fairly. Rather than applying a flat rate we will be pricing for underwriting factors like age and credit rating, just as in any other insurance product."

The other major change, total loan cover, has been introduced on both critical illness and life cover. The change means that in the event of critical illness or death the customer or his family will receive the total loan amount plus their loan protection premium, no matter how close they are to paying off the loan.

The insurer has also extended its disability through accident or sickness to cover customers under the age of 65 and retired from paid employment.