The Money Stop

Anyone that takes out finance likes to have the peace of mind that they are protected against situations that could render them unable to make repayments, and payment protection insurance cover is an effective way to do this.

With Payment Protection Insurance, or PPI your payments can be protected for a set period of time if you are unable to work and pay due to certain circumstances. This form of cover is available with all sorts of finance, such as credit cards, loans, catalogues, and other forms of finance. Some people can really benefit from the protection that PPI offers, but it is important to remember that this type of cover is not suitable for everyone, nor is it compulsory.

Payment protection insurance is designed to cover you in the event that you are unable to work and make repayments because of sickness, accidents, or redundancy. This insurance covers you for a set period of time, which will be outlined when you take the policy out. With your insurance covering your repayments you can benefit from valuable time to get back on track or get yourself back on your feet without the added worry of how you will pay your debts.

Most lenders will try and sell you PPI when you take out finance, but this type of cover has been at the centre of controversy over recent months due to mis-selling of the insurance by lenders. There are some key things to bear in mind about PPI so that you can work out whether this cover is suitable for your needs:

• PPI provides cover in the event that you are unable to work and make repayments on your debt due to sickness, redundancy, or accidents.
• The PPI will only cover you for a set period of time, which should be outlined when you take out the policy
• The standard PPI sold by many lenders is not suited to everyone – for instance, those that are self employed will gain no benefit from being covered against redundancy
• PPI does not have to be taken through the lender through which you are taking the finance. You can take it through an independent company, and it is best to compare costs to find a more affordable policy as this type of cover can prove expensive
• Not taking out PPI will not affect your ability to get finance despite what some lenders may lead you to think
• PPI is not compulsory and you should not be pushed into taking it out.

Over recent months the UK’s financial regulator, the Financial Services Authority, has been enforcing more stringent regulations with regards to the sale of PPI. The FSA has been handing out hefty fines and penalties to companies found guilty of mis-selling PPI to consumers that cannot benefit from it, and this has led to a real crackdown on the sale on PPI.

To further aid consumers the FSA has announced that in 2008 it is issuing new guidelines for consumers to help them to find the most suitable PPI policy for their needs. Consumers will be able to access the guidelines via the FSA website, and will simply need to enter some details about their needs and circumstances in order to be taken to a list of the most suitable PPI policies based on the information that they have provided.

More resources:

• The Pros And Cons Of Payment Protection Insurance
• Travel Insurance – Keep Your Holiday Protected!

Useful sites:

• Money Made Clear - the FSA’s consumer driven site
• Citizen’s Advice - free impartial advice from experts

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