PPI Claims - What Are They
Over the past year the subject of PPI, or Payment Protection Insurance, has dominated the financial headlines, after financial regulators in the UK discovered that many PPI policies had been mis-sold, practically forced upon the buyer, or in some cases added to the finance without the buyer’s knowledge. This resulted in a major review of PPI sales and severe penalties for companies that were found to be mis-selling this type of insurance cover to consumers, resulted in a real shake up of the industry.
However, despite all of this negative publicity Payment Protection Insurance is not necessarily a bad thing – in fact, having a suitable, appropriate PPI policy in place can offer valuable peace of mind, and can prove invaluable in the event that you find yourself in a situation where the policy has to be used. It is important for anyone that takes out a PPI policy to make sure that the policy is suited to their needs and not just assume that the lender has sold them the most appropriate policy for them.
Payment Protection Insurance is sold with all sorts of finance, from credit and store cards to catalogues, loans, mortgages, car finance, and other forms of credit and finance. The idea of PPI is to protect the borrower from the pitfall of being unable to make repayments for a period of time due to sickness, accidents, or redundancy. If you lose your ability to work and earn money under these circumstances the idea is that your PPI kicks in and your repayments will be covered whilst you get back on your feet, giving you valuable time to get yourself back on track without the added worry of how you will keep up with your repayments.
In reality, although many people have benefited from this type of cover many others have found themselves lumbered with a costly but useless policy on which they will never be able to claim. This is because they have been mis-sold their policy, and have therefore ended up with cover that does not fit in with their needs and circumstances, which basically means that they are wasting their money on insurance cover than will never be of any use to them.
There are a number of things that you should bear in mind when it comes to Payment Protection Insurance:
Is the cover appropriate for your needs? You need to make sure that you check the small print on this type of cover before you commit to it, as otherwise you could be wasting your money on cover that is not appropriate for your needs. For instance, is cover than protect your repayments in the event of redundancy any good to you if you are self employed? Make sure that you know what the policy cover, and more importantly that it fits in with your needs and circumstances before you take the cover out.
Is this cover compulsory? This type of insurance cover is not compulsory, although some lenders have made it sound as though it is when discussing it with borrowers, and some have even tried to make out that the chances of getting finance are increased if you take out this cover, which is not the case. In short, this type of cover can provide valuable peace of mind and protection if you choose the right cover for your needs, but it is not compulsory and can bump up the cost of borrowing considerably.
Do you need to take this cover from any particular lender? Although some lenders may make it sound as though you have to take PPI through them because you are taking the finance with them, this is not the case. It is, in fact, best to shop around for your PPI and find a suitable policy with affordable premiums, as the cost of cover can vary widely from one company to another.
Is the cover automatically included in your quote? This is something that the Financial Services Authority has really cracked down on, as many people were ending up with PPI included in their finance package without even realizing it. Companies should either quote you on finance without PPI included or should provide you with two quotes – one with PPI included and one without. However, it is a good idea to check that PPI has not been included when you get a quote for a loan or other form of finance.
FSA steps in
As a result of the confusion and controversy over PPI the Financial Services Authority has recently announced that it will be setting up guidelines for consumers on its website in the coming year. By answering a few questions on the site consumers that are looking for Payment Protection Insurance will be directed to a number of policies that are suited to their specific needs and circumstances, enabling them to select from a range of policies that will not prove to be useless.
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