Payment Protection Insurance, or PPI, is a type of insurance consumers can obtain to safeguard the repayment of a loan. It is also referred to as income protection insurance. PPI claims can be made if you have lost your job due to redundancy, had an accident or become disabled. It will cover your loan payment for you for a specified time.
In order to submit a claim you must be out of work for up to six months before you can submit a claim. If approved, the policy should cover your loan payments for up to a year.
If you purchase the protection plan when you get a mortgage or a credit card, you might be in for a surprise. First of all, the lenders might have told you that it is required. It is not. It is not legal for you to have to purchase a plan in order to get a loan. Lenders sometimes demand purchase before they will commit to lower interest rates. This is also not allowed.
Consumers have found that the costs for PPI have been included in the cost of the loan, something they did not agree to. Know what you are paying for and ask to see the loan repayment plan. Compare it with and without PPI so you will know exactly what the costs for the PPI are. If it is worked into the loan, you will end up paying interest on the PPI costs.
One of the concerns in the use of this type of insurance is the risk that agents who receive commissions for selling it may practice deceptive selling tactics. There have been many documented instances when policies were sold to consumers when there was no real value in purchasing it.
There are many exclusions that make the policies less than ideal. The only time it will provide coverage for unemployment is in the case of redundancy. Families with more than one income or enough savings to weather a storm can do without it. Since people who are self-employed cannot be redundant, their lapse in income will not be covered by the policy. In many instances, people are paying for policies that they will never be able to use.
For those consumers who believe income protection policies are necessary, stand-alone products are available. These products can even be tailored to meet the needs of the customer. An example is someone who works for an employer who offers a plan to pay injured employees. Stand-alone plans allow customers to design a plan that will cover only what they need.
Churning, or charging you over and over for the same policy, is illegal. If you find this is the case, whether it is intentional or accidental, you can get your money back. You must have been told at the outset that you were purchasing the policy. If it was not made evident to you, and you did not want it, you may get your money back.
If you are getting PPI, read the fine print so you know exactly what is and is not covered. Be an informed consumer and proactive in safeguarding your finances. When submitting PPI claims, keep all of the documentation and make sure you are getting what you paid for.
In order to submit a claim you must be out of work for up to six months before you can submit a claim. If approved, the policy should cover your loan payments for up to a year.
If you purchase the protection plan when you get a mortgage or a credit card, you might be in for a surprise. First of all, the lenders might have told you that it is required. It is not. It is not legal for you to have to purchase a plan in order to get a loan. Lenders sometimes demand purchase before they will commit to lower interest rates. This is also not allowed.
Consumers have found that the costs for PPI have been included in the cost of the loan, something they did not agree to. Know what you are paying for and ask to see the loan repayment plan. Compare it with and without PPI so you will know exactly what the costs for the PPI are. If it is worked into the loan, you will end up paying interest on the PPI costs.
One of the concerns in the use of this type of insurance is the risk that agents who receive commissions for selling it may practice deceptive selling tactics. There have been many documented instances when policies were sold to consumers when there was no real value in purchasing it.
There are many exclusions that make the policies less than ideal. The only time it will provide coverage for unemployment is in the case of redundancy. Families with more than one income or enough savings to weather a storm can do without it. Since people who are self-employed cannot be redundant, their lapse in income will not be covered by the policy. In many instances, people are paying for policies that they will never be able to use.
For those consumers who believe income protection policies are necessary, stand-alone products are available. These products can even be tailored to meet the needs of the customer. An example is someone who works for an employer who offers a plan to pay injured employees. Stand-alone plans allow customers to design a plan that will cover only what they need.
Churning, or charging you over and over for the same policy, is illegal. If you find this is the case, whether it is intentional or accidental, you can get your money back. You must have been told at the outset that you were purchasing the policy. If it was not made evident to you, and you did not want it, you may get your money back.
If you are getting PPI, read the fine print so you know exactly what is and is not covered. Be an informed consumer and proactive in safeguarding your finances. When submitting PPI claims, keep all of the documentation and make sure you are getting what you paid for.
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