PPI stands for payment protection insurance.
This type of insurance policy covers your credit card payments or mortgage payments in case of illness, accident or other loss of income.
This is a product sold in the U.
K.
and is also know as Loan Protection Insurance or Accident, Sickness and Unemployment Cover (ASU).
The intention of this product is sound, but over the years the inflated prices and the misrepresentation have made payment insurance a topic of discussion.
Is PPI required? This has been part of the problem with the representation of this insurance.
Payment protection insurance is not mandatory, even though clients were led to believe it was when they took out loan.
Now that customers are aware of this fact, fines are being tolled out to the tune of millions.
The other misleading statement that lenders are now paying for is "you could only by this insurance from that lender", false.
There are over 20 million PPI policies enforced in the U.
K.
which bring in billions in revenues.
Do You Need Payment Protection? Each individual has different comfort levels concerning debt.
Evaluating the type of debt you have can help in your decision.
A house for example is one of the biggest debt burdens you will have.
In a situation where you are unable to make your payments for a few months, and if it was a condition that was covered under this policy, it sure would be nice to have that payment protection.
Looking at the lower end of the debt scale, you have an unsecured credit card.
In this case missing a few payments may put a ding in your credit score, but does this justify the price of protection insurance? If your budget is limited, then you have to allocate your money for insurance on the higher priority assets.
In the above case that would be your house.
Things to Remember About PPI Always check the fine print.
This is a common saying, but hard to do with the way the contracts are written.
Still, look for the factors that are important to you like what is not covered, is the full value covered, check to make sure the term of the policy fits the term of your loan, and keep copies of everything.
Next, make sure you have all the information in case you need to make a claim.
Contacts, phone numbers, forms to use, get a copy of the procedures.
Finally, shop around.
There are single premium PPI policies, pay as you go policies, now that you know you do not have to buy insurance from that lender, you can look for the deal that best suits you.