The media have been giving Payment Protection Insurance (PPI) a bit of a hard time in the last few months. This is because certain finance and loan companies have been accused of miss-selling PPI contracts or inserted PPI cover in a financial contract without informing the borrower. But when this type of insurance cover is sold in the correct way, borrowers can rest more easily, because they have a safeguard that protects them against certain financial difficulties.
The main aim of Payment Protection Insurance is to take care of your repayments for a prearranged fixed period if you have lost your means of income. This could be the result of illness, an accident or redundancy, for example. This insurance is offered for sale with many types of financial deals, including credit card and store card transactions. It is also sold to insure secured and unsecured loans.
PPI can prove very beneficial to borrowers because of the peace of mind and financial security it gives. If you are off work for a time because of illness, an accident or redundancy and unable to meet your repayments, your insurance cover will meet them. So you need not be anxious about late payments or danger to your credit ranking.
You can always take out finance without Payment Protection Insurance. It is not obligatory, but certain lenders may attempt to convince you that cover is part of the deal. That is not right and you should make up your own mind about the advantages any PPI policy will give you.
It is important to realise that Payment Protection Insurance can vary quite a lot in price and with some lenders and insurance providers can be costly. It is not compulsory to take PPI with the same party that you are taking your finance through and you are not bound to buy it from anyone. However, most borrowers would like to have the security of this type of cover and it is worthwhile shopping around to get the best deal for your needs.
Certain groups of workers should think carefully about paying for PPI. Many people would get no benefit from insuring against missing payments because of redundancy. PPI may be completely unsuitable for these people and they could be needlessly throwing money away.
When you receive your quotation from the loan or finance company, you should examine it carefully. You will need to establish whether or not a section has been included for PPI. Some lenders add PPI to their finance quotes as a matter of routine, and many people have paid for this cover without knowing.
This article is written by Jonathan L Walker, on behalf of Claims Management
UK, specialising in helping people with their Mis-Sold PPI