What is Payment Protection Insurance (PPI)?
PPI or payment protection insurance is a form of protection that most people are becoming more familiar with unless they have been completely skipped the financial section of their newspapers. It has been used as an all purpose term to cover such things as mortgage payments, loss of income and loan safeguarding. Coverage of this type of protection has recently ramped up in the media, but unfortunately, most of it has been negative.
So what exactly is payment protection insurance? Simply stated, if you are unable to work because of injury, illness or long term disability, the PPI policy will pay out a tax free amount on a monthly basis. In effect, this can cover most of the major credit debts that are owed such as mortgage and credit card payment. Of course some carriers will even offer additional coverage for a higher premium. For persons trying to get back on their feet while looking for another job, this can be the best way to go.
Since the cost of living won't certainly be covered by unemployment benefits, having additional insurance can guard against falling deeper in debt with creditors. In the latter case, the person's credit score will be adversely affected and the chance for a future loan severely diminished. Payment protection insurance is a valuable tool to have in anybody's financial tool box. However, it all depends on the seller. That is the reason why that most of the coverage on this product by the media recently has been negative.
Consumer confidence has taken a huge dive downward due to the review by the competition commission that is schedule to go on for upwards of two years. Some outlets have even reported that consumers have been coerced into purchasing PPI's that are far more expensive than what they require. These same customers were not explained all of the options and could have bought only what they needed instead of a policy that covered everything. Many cases have already been filed by litigators and a few of the larger firms face fines for poor business practices. Several consumers have been awarded substantial sums of cash for being misled by company officials.
When the product was actually sold to a customer, the representative for the firm did not fully explain all of the options up front, preferring to wait until after the policy had been purchased. This is what is known as a failing. On some occasions, the customer wasn't even asked the correct questions to assess the proper product line.
The main point of emphasis of these substandard practices is exclusion. A number of customers with a pre-existing health condition were sold a policy that did not cover the malady.
Self-employed people were also greatly affected by PPI policies. There are very few contacts written for these entrepreneurs primarily because it was hard to prove the claimed income was correct. Some insurers would only pay out benefits if the company was closed.
These are extreme cases though, and with the right due diligence the proper PPI policy can be purchased to provide the right amount of protection.
So what exactly is payment protection insurance? Simply stated, if you are unable to work because of injury, illness or long term disability, the PPI policy will pay out a tax free amount on a monthly basis. In effect, this can cover most of the major credit debts that are owed such as mortgage and credit card payment. Of course some carriers will even offer additional coverage for a higher premium. For persons trying to get back on their feet while looking for another job, this can be the best way to go.
Since the cost of living won't certainly be covered by unemployment benefits, having additional insurance can guard against falling deeper in debt with creditors. In the latter case, the person's credit score will be adversely affected and the chance for a future loan severely diminished. Payment protection insurance is a valuable tool to have in anybody's financial tool box. However, it all depends on the seller. That is the reason why that most of the coverage on this product by the media recently has been negative.
Consumer confidence has taken a huge dive downward due to the review by the competition commission that is schedule to go on for upwards of two years. Some outlets have even reported that consumers have been coerced into purchasing PPI's that are far more expensive than what they require. These same customers were not explained all of the options and could have bought only what they needed instead of a policy that covered everything. Many cases have already been filed by litigators and a few of the larger firms face fines for poor business practices. Several consumers have been awarded substantial sums of cash for being misled by company officials.
When the product was actually sold to a customer, the representative for the firm did not fully explain all of the options up front, preferring to wait until after the policy had been purchased. This is what is known as a failing. On some occasions, the customer wasn't even asked the correct questions to assess the proper product line.
The main point of emphasis of these substandard practices is exclusion. A number of customers with a pre-existing health condition were sold a policy that did not cover the malady.
Self-employed people were also greatly affected by PPI policies. There are very few contacts written for these entrepreneurs primarily because it was hard to prove the claimed income was correct. Some insurers would only pay out benefits if the company was closed.
These are extreme cases though, and with the right due diligence the proper PPI policy can be purchased to provide the right amount of protection.