Payment Protection Insurance

Until a few years ago, not many people would have heard of Payment Protection Insurance, commonly referred to as PPI. Now it is almost inescapable, with TV adverts and text messages bombarding people with queries as to whether they have ever had PPI on bank products.

But what exactly is Payment Protection Insurance, and what type of protection does this type of insurance offer people who take it out?

Well, this problem enables consumers to be sure that a loan gets repaid even in the even of the person who borrows the money dying or having some other circumstance that would put repayment in jeopardy: more commonly something like a long term illness or perhaps losing their job meaning that the revenue they had which was paying for the loan has gone.

It is a product that is standardly sold by anyone who offers credit, and is an add-on payment to the loan or overdraft product, as relevant.

So it's just another type of insurance product that some people choose to take out for peace of mind, and others don't. Like is standardly the case with insurance, you hope you never actually have to claim on it. So why the controversy with PPI in particular?

The main reason seems to be allegations that Payment Protection Insurance was mis-sold by some quarters and thus that many people were unaware that they even had it, despite the fact that they were paying for it. The reason for this is said to be that there were commissions available for those who sold PPI as an addition to a loan and therefore they were highly incentivised to add it on. Several companies in the UK were fined by the FSA for mis-selling PPI. Many companies have sprung up that help people reclaim PPI that they believe was mis-sold to them.

Of course it needs to be said that Payment Protection Insurance can be a useful form of insurance, and if taken out in full understanding of what it is and the protection that it does and doesn't afford, it can indeed be a very sensible form of insurance to get.

Related Articles...

Agricultural Insurance Agricultural insurance is a niche type of insurance product that is available for those who work in specific areas of agriculture. This type of product could offer piece of mind against various... Van Insurance Most people know about car insurance, but what about van insurance? Clearly if you drive a van then you need to know about van insurance. There are various different types of van insurance which... Bicycle Insurance Bicycle insurance, as with all insurance products, gives you a way to deal with the risk of having something happen to your bicycle - depending on the product you choose - and therefore having the... Types of Car Insurance There are various different types of car insurance product that are available in the UK. The minimum level of cover that is available to meet legal requirements is a product called third party... Life Insurance One of the most well-known types of insurance product is life insurance. And this does very much what it says on the tin - it insures against the life of a person. Thus, if the policy holder (the... Travel Insurance One of the most common forms of insurance product is travel insurance. Wherever there is travel involved, there is invariably risk, and infact a range of risks, and therefore an insurance product... Saving on Home Insurance Home insurance splits into the bricks and mortar insurance - buildings insurance - and the stuff that you put inside your house such as your valuables - the contents, hence that bit is called the... Saving Money on Car Insurance Like with most types of insurance, the car insurance sector is extremely competitive. There are a lot of providers of this product, but also a lot of different factors that are taken into account to... Vehicle Insurance Vehicle insurance is the category of insurance products that cover, surprisingly enough, vehicles. These can be any sort of vehicle that you can think of, with of course the most common product... Prize Indemnity Insurance Prize indemnity insurance is a purchase that would be considered by someone offering a large prize and thus could stand to lose a considerable sum of money. This form of insurance would mean that...