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...

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... Reinsurance The concept of 'reinsurance' is quite an interesting one. It comes down to the same sort of logic as 'who will guard the guards?' - in this case who will insure the insurers. The answer is, other... 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... 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... Pet Insurance People love their pets - whether you are a cat lover or a dog lover, or prefer something like a rabbit, a guineapig, snakes, hamsters or indeed any animal that you can think of, then pet insurance... Motorbike Insurance Motorbike insurance might sound like a bit of a niche category of insurance, but there are actually a huge number of people who ride these sorts of vehicles, and so even within this there are... Flood Insurance Flood insurance is a specific product under the umbrella of insurance and it covers - as the name suggests - losses that occur due to flooding. In many cases, this form of protection (flood... Health Insurance One of the most common insurance products is health insurance, a broad umbrella category that covers any sort of insurance product that helps an individual mitigate against the expenses that are... 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... Crop Insurance There are two main types of crop yield insurance available, which come under the category of types of agricultural insurance product. It is self-explanatory what crop insurance guards against -...