Payment Protection Insurance (PPI) is intended to provide a safeguard to borrowers who find they can't earn money and maintain repayments because of a variety of unexpected events. These events could be an accident, illness or loss of income due to dismissal or redundancy. The insurance will then cover your repayments for a preset period. This kind of insurance is sold in association with all sorts of financial transactions, such as transactions involving credit cards, store cards and loans, whether secured or unsecured.
In the right circumstances, Payment Protection Insurance gives important peace of mind and security to consumers who need to borrow money. However, in recent months the reputation of PPI has been damaged in the media, owing to the practices of certain lenders and finance companies who have miss-sold it or attached it to a finance agreement without the knowledge of the consumer.
Some finance lenders will attempt to convince you that PPI must be included with your loan, but this is not true. You should always check on what benefits each PPI contract contains and decide for yourself. You always have the option of taking out a loan without this type of cover. It is not compulsory.
But, remember that Payment Protection Insurance can prove invaluable, as it means you do not have to worry about failing to meet repayments if you are unable to work for a short while due to illness, accident or redundancy. PPI can give you the peace of mind that your payments will be met for you and there will be no danger to your credit rating.
It is not obligatory to take out Payment Protection Insurance with your lender when you arrange a loan. You can find your own insurance provider. Most borrowers prefer to have the safeguards that this insurance can give. However, it is important to remember that PPI can vary a lot in price and can be quite costly with some lenders and insurance vendors, and so you should shop around and get the best deal for the cover that suits you.
You may find that you have been offered a quotation from your lender for a finance deal with Payment Protection Insurance already added on. Consequently, many people have taken out PPI without knowing about it. When you are enquiring about a loan or some other form of finance, you should check your quotation carefully. You should ascertain whether it includes a PPI component or not.
A standard PPI policy will not be suitable for everyone, and could well be a waste of your money, altogether. For instance, it would not be appropriate for a self-employed person to pay for insurance cover guaranteeing repayments in the event of redundancy.
This article is written by Jonathan L Walker, on behalf of Claims Management UK, specialising in helping people with their Mis-Sold PPI |
No comments:
Post a Comment