What is payment protection insurance?
- 30TH MAY 2007
Payment protection insurance (PPI) is protection for your monthly repayments such as credit cards, loans and your mortgage. Should you become out of work due to accident, long term sickness or unforeseen unemployment, this private insurance policy will provide you with a tax free lump sum payment to you are back at work. A policy typically runs for 12 months, though some offer cover for up to 24 months.
Although your bank or mortgage lender will try and coerce you in to buying their payment protection insurance cover (often at extortionate prices), payment protection insurance can be bought independently from a standalone provider. Despite what your bank or lender imply, the cover doesn’t have to be taken alongside your loan or credit card from your bank. Buying independently is more often than not the cheapest way to buy.
However, the sector has been classed as nothing more than a “scam” and indeed it is big business for the banks, with the business estimated to worth around £5.5 billion. More recently it has come to light that not only do the banks, lenders and building societies charge way over the odds for their cover, but they have also mis-sold a huge amount of policies.
The Financial Services Authority has cracked down on companies who have failings when it comes to providing this cover which has led to some of the top names in finance being fined. At the moment it is under review by the Competition Commission and it is hoped that as a result the consumer will start to get a better deal.
Until that day happens, one company you can trust is British Insurance; Simon Burgess heads the company and is very outspoken when it comes to the big names “ripping-off” the consumer in favour of profit.
British insurance are an independent and standalone company who pride themselves on the fact that they are “the good guys” in the payment protection sector, offering low cost, quality cover.
