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Archive for tag: Do You Need PPI

Do You Need PPI?

This article was first published in June 2013.
Five years on, we thought we would take an up to date look at some of the PPI related topics we were talking about back then. We've updated this article so you can decide if PPI is still a valid insurance product for you.

With the payment protection insurance (PPI) selling scandal still in the headlines, it can be difficult to see if there is any advantage to having this type of policy. And who would have thought that five years since the publication of this post, we would still be talking about PPI compensation.


The problems with PPI

There were many problems with PPI;

  • the way in which the product was sold
  • poor value for money
  • the slow claims process
  • and the low pay out rates for successful claims

If you are taking out a loan or credit card, and PPI is offered to you, how do you know whether to accept it or not?

Is PPI suitable?

Back in 2013, when you took out a loan etc., you would also be offered other products during the process, such as PPI. Today, this practice is no longer acceptable with all financial companies having to wait 7 days or more before they can offer you insurance products and so on.

PPI was not suitable for many people because it was expensive, more so when you consider the low level of cover it offers.

Before signing up for PPI - or any insurance product - consider it carefully by asking yourself key questions:

If you lose your job, can you afford to keep up repayments on the loan?

Some people have savings or other policies that may be of use should this happen. For example, do you have;

  • Life insurance
  • Another type of illness policy such ascritical illnessorincome protection policies
  • Benefits such as sickness or redundancy benefits with your employer
  • An insurance combined with your mortgage

If you do have the above, then a PPI policy may not needed.

How much will the policy cost?

The cost of a PPI policy can be high, with very little level of cover offered in return. It can significantly add to your loan repayments or credit card debt. As with all financial products, it really does pay to shop around.

How long does the policy pay out for?

Many PPI policies only payout for a set length of time, for example, for the first 12 months of any claim.

Most PPI policies had a 'waiting period' when it comes to making a claim, so you may find that you will still have to meet repayments for a month or so, before the policy 'kicks in'.

Are there any exclusions?

Many customers seeking PPI compensation are doing so as a result of them not being made aware of significant exclusions under the terms and conditions of the policy. If you have a medical condition, for example, you may find that it will be excluded from any claim that you may make. If it is included under the policy, you may also find that this substantially increases your policy premium.

The advice in 2013 remains the same in 2018 - when it comes to buying any financial product, seek the advice of an independent financial advisor first.

Do you need PPI?

The scandal surrounding the mis-selling of payment protection insurance (PPI) cannot be avoided, more so now that the August 2019 deadline has ben announced.

It seems that on a regular basis, articles appear in newspapers and on the web about the mis-selling of this insurance product.

Many people have already claimed compensation but many more are yet to do so - are you one of them?

PPI is still a genuine product but, like all insurance products you need to be sure that the policy provides the cover you need.

What is PPI?

PPI is designed to cover the payments on your debts - such as loans, mortgages, credit cards etc. - should you be unable to work due illness, accident or redundancy.

The policy will make repayments on the product it covers but for a limited time and dependent on which company is providing your cover.

In some cases, PPI payment cover lasted for 12 months, whilst other policies stretched to 24 months.

What PPI does not cover

It is suggested as with all insurance products, that you examine in detail what is and what it not covered.

In most cases, a run-of-the-mill PPI policy will not cover:

  • The first 90 days or 12 weeks after you have stopped work - you will need to make any payments on the loan etc. up to this point. Can you afford to do that with less or no income?
  • Various illnesses are NOT covered - check these exclusions carefully, as they may include illnesses you could be 'prone' to.
  • Pre-existing conditions or illnesses you already know about and this means the most likely reason why you cannot work is not covered.
  • PPI will not provide cover for those who are retired but the bank still sold it to you…

Do you NEED PPI?

PPI can be useful in certain circumstances, e.g. you have a credit card, loan or mortgage and you want or need an insurance policy that will cover your repayments on one of these products.

However, considering the numerous exclusions and specific cover offered by PPI, you should check carefully if the PPI policy is providing an acceptable level of cover.

Some people have benefits with their employer that makes PPI surplus to requirements. These benefits may include;

  • A comprehensive employee benefits packages such as sick pay being your full salary for 6 months.
  • You may have savings which would, in the short term, be enough to make any payments
  • Your partner's income would be sufficient to make payments on your mortgage etc.

Were you mis-sold PPI?

PPI can be, for some, a useful product.

However, the wholesale mis-selling of the insurance has given it a bad name as an insurance policy, with many customers questioning its worth.

Payment Protection Scotland is a specialist claims management company, offering a PPI claims service to customers from across Scotland.

With no upfront fees, you can be confident in the service that we offer. Contact us TODAY!