What Is Payment Protection Insurance?
Category: PPI. Date published: 19/10/2008
So what is Payment Protection Insurance (PPI) (also and more arguably better known as Accident Sickness and Unemployment Insurance or ASU)?
Quite simply it’s an insurance that the consumer (YOU) is offered or sold as a protection against the payments made to meet a personal debt. You pay an additional fee to protect you in case whilst still making payments against a debt you become ill, unemployed or have an accident resulting in your inability to make the payments. In theory you can sleep easy knowing that your debt will be met in those circumstances.
Some less scrupulous policies can contain restrictions delaying their payments to protect you, this can be 6 months or even 12 months later that they begin to fulfil the obligation that you thought you had paid for! Read the small print.
Policies can last for 1 year, 2 years or 5 years, basically for the “life time” of the actual debt. The longer that the policy runs then the more expensive the protection will be. Not all policies cover you for the full amount of debt too. You may find that only half or only three-quarters of the asset is “covered” by the policy. Read the small print.
Payment Protection Insurance is a significant product in the UK Insurance sector and after Car and Home Insurance it is the third largest domestic insurance product. Our advice is to shop around and buy the product separately so that you can find a bespoke product that meets you particular needs and not those of the salesman at the finance company, car dealership or furniture store.
Always read the small print and if you don’t understand what it says then don’t sign it. Simple advice.
For those reading this article too late and if you have taken out payment protection insurance then visit our PPI page at www.moneycloud.co.uk/ppi and find out more about how you may well qualify for a refund with no upfront costs or obligations.
