Payment Protection Insurance Can Protect Your Loan And Credit Card Repayments
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Protect Your Loan and Credit Card Repayments with Payment Protection Insurance
Summary
Payment Protection Insurance (PPI) is a valuable safety net that provides you with an income if you find yourself unable to work. This policy ensures you can continue paying off loans or credit card bills, thus avoiding debt.
How It Works
PPI kicks in when you're out of work, covering your loan or credit card repayments. By paying a monthly premium?"calculated based on your coverage amount and age?"you're eligible to receive a tax-free income after an initial waiting period of 31 to 90 days. This support can last for up to 12 months and, in some instances, extend to 24 months.
What It Covers
Also known as ASU insurance, PPI provides financial support if you're unable to work due to an accident, illness, or job loss like redundancy. However, policies have exclusions, which might prevent some individuals from claiming. These exclusions may affect part-time workers, individuals with ongoing illnesses, self-employed individuals, and those of retirement age. It's crucial to read the policy's key facts and fine print for specific details.
Optimal Ways to Purchase PPI
While you can get PPI along with a loan or credit card from a high street lender, this is usually the most expensive option. A more cost-effective choice is purchasing the policy independently from a specialist. Specialists often offer lower premiums and provide essential information to ensure the policy suits your needs.
Mis-Selling Issues
In 2005, the issue of PPI mis-selling was highlighted when Citizens Advice filed a complaint with the Office of Fair Trading. This led to an investigation revealing widespread mis-selling and resulting in fines for some major high street lenders. The problem arose because providers failed to give consumers the necessary information for informed decisions.
Making Informed Decisions
Understanding your policy is crucial for PPI to be effective. In March 2008, the Financial Services Authority planned to introduce PPI comparison tables. These tables were designed to guide consumers through a series of questions, enabling them to make well-informed choices.
By choosing the right PPI policy, you can safeguard your finances and enjoy peace of mind, knowing that you'll be covered in unexpected situations. Always ensure you thoroughly understand the terms and conditions before making a purchase.
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