To fully understand the advantages and disadvantages of hiring a PPI, we must first understand what it is. Payment Protection Insurance, or PPI, is an insurance policy that is designed to provide financial coverage on a loan, mortgage, or credit card payment.
Given that British residents are apparently over £3 trillion in debt, it’s more than likely that by reading this, you too are in debt. If so, you will almost certainly have taken out a loan, mortgage, or credit card at some point in your life. This is where the PPI comes into action.
When taking on debt, you may be concerned about making payments. PPI will be offered to you as an added sense of security. If you get sick, injured, or lose your job, PPI will cover your debt payments to give you a break while you recover, get treatment, or find a new job.
So what’s so good about getting a PPI?
Payment protection insurance is exactly what it says it is. Insures you when you can’t make payments on a debt or credit agreement. As such, it offers peace of mind and security that if you are unable to do so, your payments will still go through.
Remember, the goal of insurance is to provide a safety net for when you really need it. PPI is just like any other insurance policy in that it helps you financially when you need the money. If you’re worried about your debts or having a hard time paying them if something goes wrong, a PPI might be perfect.
But what are the disadvantages of a PPI?
Most policies will only pay for a certain period of time, often 12 or 24 months. If you still can’t pay your debts, you’ll need to find an alternative way to cover the repayments. There may also be a maximum amount of coverage determined by your monthly premium payments.
There are a number of “hidden” clauses, often in the fine print of the policy. An example of this is when your coverage doesn’t actually cover the full cost of the loan. If this is the case, the policy may not be worth the premiums you’re paying: A five-year loan with only one year’s PPI could add a disproportionate level of interest to your payments.
PPI is not necessarily the most suitable product to cover your lost income. It can provide financial coverage against unforeseen circumstances, but many other policies offer this as well, so consider the limitations and restrictions of standard PPIs.
The Financial Services Authority, the UK’s financial regulator, may have put in place a number of changes to ensure financial services providers treat customers better, but IPPs have still faced a number of complaints and accusations in recent years. last years. Please consider these multiple complaints before deciding to purchase a PPI for yourself.