Payment Protection Insurance
Payment Protection Insurance Claims
Payment protection insurance has been created to cover the policyholder should he or she be taken ill, made redundant, or get injured in an accident, thereby preventing him or her from repaying their credit card dues or loans on time.
For many people, one of the biggest concerns is not being able to pay their financial obligations should they lose their regular income because of an accident, sickness, or redundancy. There are a number of ways in which you could cover yourself for such eventualities and one of them is through Payment Protection Insurance.
However, even if PPI can give you peace-of-mind, it can be hugely overpriced. Not only that, its terms and conditions are filled with exclusions that would make it difficult for you to file a claim.
If you are self-employed for example, you may find that the payment protection insurance sold to you may not make you eligible for a claim. If ever you are allowed to, the sum is usually just a bit more than the amount you paid for the premium.
However, if you are fortunate enough to qualify for a claim, the short-term aid that PPI can give will help you survive financially. If you have a mortgage to take care of, there is also a form of PPI called MPPI or Mortgage Payment Protection Insurance. This policy will pay for your mortgage for a year or two should an accident, illness or loss of employment prevent you from paying off your dues.
However, before taking an MPPI, it is advised that you consider income protection first, since it pays out longer. MMPI can also have a lot of exclusions in their policy such as pre-existing medical conditions.
Why the Controversy Over PPI
A lot of attention has been given to Payment Protection Insurance because of the way it has been sold to consumers. Most people purchased the coverage without knowing it because sales staff kept adding PPI as if it was a part of the sale. There are also providers that have been telling its borrowers that PPI is obligatory and had it included in their loan quotations even if it is in fact, optional. This has led to the banks who mis sold ppi being fined by the Financial Services Authority.
The next time you take out a loan from a lender then, be sure to check if your quote includes PPI. Bear in mind that you cannot be compelled to take it so if you do not need it, ask the provider to remove it from your quotation.
In case you really need a PPI coverage, then purchase it as a standalone policy. This can be bought from several insurance providers and is cheaper than those that are being sold by lenders.
Improvements Brought by the Competition Commission
Because of the way that Payment Protection Insurance has been sold by lenders, banks have been banned from selling Payment Protection Insurance along with personal loans and credit cards by the Competition Commission in January of 2009. The decision was made after the commission concluded that there is an unfair advantage on the part of lenders when selling the coverage to consumers, which results in uncompetitive market that overcharges clients. Borrowers are now being urged to request a ppi reclaim and claim back the money they paid towards PPI.
The Competition Commission further ruled that beginning year 2010, lenders that are offering loans or credits should wait for one week before selling payment protection coverage to their borrowers. It has been assumed by the commission that the seven-day period will give the consumers the encouragement to look around for the best PPI deal.
Single premium Payment Protection Insurance that obliges borrowers to pay interests on both the loan amount and insurance cost has also been prohibited. Lenders have also been mandated to give annual statements and PPI personal quotes to its borrowers.
If you feel that you you may have been mis sold PPI or, contact us today and we’ll talk you through the ppi claims process. It’s free to enquire and we have a wealth of experience in reclaiming mis sold ppi.