| Payment protection insurance |
|
|
|
This type of insurance, as its name suggests, protects regular payments that you have committed to. This might include personal loans, credit cards or even mortgages.
How does it work?You can take PPI when you apply for any of the above, but it can also be taken a later date. Like MPPI, PPI will pay out each month to cover your relevant debt repayments in the event of being unable to earn through losing your job, becoming ill or having an accident. Premiums will also be set at a fixed price for all. Therefore the claim will be received in monthly payments. PPI will typically pay out for 12 months, but it can pay for up to two years. After the claim has been accepted there will be a deferred period of up to 60 days before payments will actually begin.
What are the pros and cons?Again, consumers have to have their wits about them when buying PPI. Sometimes, when applying for a personal loan, for example, your monthly repayments will be quoted inclusive of this insurance. This is bad practice, as taking PPI with any form of borrowing might be recommended but it is never compulsory. PPI may also come with a number of exclusions relating to the reasons why you are unable to work. For example, many insurers state that a bad back or stress are not valid reasons to claim.
CashQuestions Guide to Home Insurance Tag this article :     |
| Got a question? Ask our panel of financial experts » Click here | |||||||
