Payment Protection Insurance: Are They Truly Necessary?

By Author: Yossarian Smythe
Total Articles: 25
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Have you applied for a loan or a credit card? Of course you have. However, there are huge chances that you may not be aware of the things that are added on to your loan agreements. At the time of sale, you must have got a very brief or almost no information on what else you were being sold with the loan or credit card service. Payment Protection Insurance is one such insurance plan that is usually added along with these loans. But this holds true only for those loans that have been bought prior to May 2009. If you are not already aware of the reason why this happened you must read along.

Payment Protection Insurance (PPI) plans were a genuinely valuable product of customer importance since it is the insurance plan that claims to cover all your loan premiums and interests if you were to be victims of unemployment, sickness, accident or redundancy within a given period. This seemed like a good deal since factors like unemployment, sickness and accidents can never be predicted and when you are in dire need of money due to lack of income or being rendered physically unfit to work the loan providing companies would act upon ...
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PPI and take care of all your debt repayments. However, what you might miss noticing is in the meantime when all is well with you and you are paying for both the loan and the associated insurance policies you end up paying massive interest rates applicable on both of them that adds up to an amount as good as the cost of your policy.

It was observed that the lenders of the loan plus the PPI policy earned more profits via the PPI rather than the loan itself. Believe it or not, this has been happening for the past 15 years in various forms. Finally, due to a lot of pressure from various consumer groups, the Citizens Advice Bureau and the media in the UK the Financial Services Authority (FSA) and the government have banned this practice by the loan lending companies. We have PPI claims and reclaims that can be filed against these companies now to get back all the money that you have relentlessly spent over these overtly expensive policies that were without your knowledge robbing you off your money.

Most of these policies that come along with the loan and the credit card offers are often forced upon you by masking them under the false disguise of being an essential for a back-up for your debts. Many customers are kept in the dark about the real terms of the policy that, if you analyze now, would turn out to be something totally unnecessary. So unless you think that your existing loan with your PPI policy would be useful for you by going through the terms and conditions that it came along with, rather carefully, your safer bet is to have such PPI policy on your mortgages that is purchased from standalone insurance companies that may have a similar cover at one third of the cost.

The author of this article knows all about PPI and has written many articles on PPI Claims. And the author has an excellent knowledge in PPI Reclaim and has been in finance sector for years.