What is PPI?
PPI, sold in the right circumstances, can be helpful. But what what is PPI and what does it cover?
So firstly, you need to know what PPI covers?
PPI a type of insurance by banks,Loan Companies, Mortgage Companies, Credit Card, Store Card Companies and Car Finance Companies. It is insurance that may be taken out alongside a loan, credit cards, mortgages, store card and car finance etc.
In a lot of cases PPI was added to these credit types and a fee was paid back monthly on top of the repayments, in other cases PPI could be paid in a upfront amount at the start of the lending.
- becoming unemployed, through no fault of your own
- having an accident or
- becoming sick
Each PPI policy will have its own terms. The insurance will cover your mortgage or loan payments for 12 or possibly 24 months. After the period, as defined in your particular policy, you have to cover the monthly payments yourself.
For credit and store cards, the monthly payment will at least pay the minimum amount owed each month.
The outstanding balance will either then have to be paid off directly by yourself or you could start to incur additional charges on your card for interest payments.
Be aware that the payments for credit card or store cards will generally be based on the amount owed at the time you claim. This means any balance built up thereafter could be down to yourself to settle.
Payments will be made if your personal circumstances are covered by the PPI policy you taken out.
It is important that you fully understand what cover you are buying and ensure that the PPI policy meets your requirements.
To be clear on exactly what PPI cover you are buying, or have already bought, you need to check the key policy details. You can either do this yourself or seek guidance from your provider.
By reading through the policy details, you will be able to determine what the policy covers, what it does not cover and how long payments will be made should you make a claim.
What is the PPI Mis-Selling scandal, why has Payment Protection Insurance been mis-sold?
Thousands of people have been sold PPI policies which were unsuitable for them – for example some were sold a policy that they could never claim against as they were self-employed or retired.
According to the Financial Ombudsman, the number of complaints over mis-sold PPI raised to to over 30,000 between October and December 2011, nearly 60% more than the previous 3 months.
Some people have even been sold PPI without even realising it.
Banks made huge profits from selling the policies alongside mortgages, loans and credit cards but only 10% of policies ever paid out. The policies were invariably massively overpriced compared to other standalone Payment Protection Policies available on the market.
If you believe you have been mis-sold a PPI policy, you can use a claims company, such as ourselves to act on your behalf to try and get your money back.
You can, if you prefer, pursue the claim yourself directly with the lender or through the Financial Ombudsman or Financial Services Compensation Scheme.
So, should you buy Payment Protection Insurance?
The bottom line, as with all personal finance matters, is that you have to make this decision based on your own specific set of circumstances. Seek professional advice if need be.
Claims Advice Bureau (UK) Limited are Authorised and Regulated by the Financial Conduct Authority FRN: 837876, Regulation recorded at www.register.fca.org.uk.