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There has been a lot of talk about payment protection insurance in the media recently and you may be wondering how this affects you. Payment protection insurance or PPI as it is abbreviated is a type of insurance policy that is taken out alongside main forms of credit. The types of credit that payment protection insurance is designed to protect are mortgages, bank loans, credit cards, store cards, catalogues, car finance and hire purchase agreements. It works like this -; if something happens to you such as you lose your job by being made redundant or you become ill and are off work for any length of time that your income is lost, the payment protection insurance will cover your monthly repayments. Your minimum payment is likely to be paid for a set period – this will stop you from becoming behind with payments and defaulting. It is very important to read the small print before you take out payment protection insurance because there are cases when it will not cover you. For example it does not cover self-employed people and it will not pay out if you have existing health conditions. It could be that by the time you consider how much the PPI will cost you per month it is not worth taking out. Before committing to the credit work out how much your repayment will be with the PPI included as this will give a true picture to the actual cost of the credit. Payment protection insurance will have its merits and disadvantages for every individual case and should be looked at from both sides. If you consider today’s unstable economic climate with job security being a concern for some people PPI will offer great peace of mind. Mortgage payments may be the biggest financial responsibility – to have a mortgage covered is a sensible idea as this is protecting your home. The issue with payment protection insurance is that going back to the 1990’s it was being mis-sold resulting in many thousands of people paying for a product that they did not need or fully understand. Banks and lending institutions were offering sales staff incentives and bonus payments when they sold PPI. The issue was that people were being sold the product when they did not need it such as self-employed people or those who have medical conditions that may prevent them from claiming. Laws have come into place to protect the consumer and lenders will no longer sell PPI alongside the original credit or at the point of sale. PPI will be offered to you as a product in its own right at least seven days after the credit agreement is taken out. The new rules protect the consumer against this type of insurance being mis-sold. Luckily if you suspect that you have been mis-sold PPI in the past it is possible to reclaim this money. A complaints procedure has been put into place and compensation may also be paid out. You may be unsure about whether you were mis-sold PPI or simply wish to reclaim PPI look online for the professionals who are experts in the complaints procedure.
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