What is PPI?
It is paradoxical that many of the people who are made to opt for PPI or Payment Protection do not even know what it is. Known by other names like Loan Repayment Insurance, Redundancy Protection, Loan Protection Cover, Mortgage Payment Cover, and Credit Protection Insurance; this insurance is often sold to people when they take a loan. Banks and other lending institutions sell this coverage to borrowers so that they can continue with the minimum monthly payments if they happen to be unable to pay back the borrowed sum because of circumstances like unforeseen unemployment, accidents, and similar incidents. The insurance providers are supposed to the borrowers to keep up with minimum payments for a period of a year or so, within which debtors are expected to get another job or recover from the accident.
However, the fact of the matter is that many people have been made to purchase payment protection insurance in spite of the fact that they may not have needed it. Since it is fairly difficult to determine whether a borrower will end up defaulting or not, they are either convinced that they need it or simply not informed about it properly. This has been identified as an unfair trade practice by Financial Services Authority (F.S.A.).
Why do banks sell it?
There have been cases where potential borrowers have been lured with loans where the lending institutions stood to make little from the loans per se, but earned substantially from the commissions received from selling the coverage.
How does it harm you?
Many banks have mis-sold payment protection insurance to their debtors because these substantial increase the monthly payments. Studies by the Citizen's Advice Bureau have revealed that the payments can increase by up to 56% because of this! Essentially there is no point in buying this cover unless you feel that you really may not be able to keep up with the minimum payments for a temporary period of time.
However, debtors often are not explained why they need the coverage. In some situations, people are so desperate to get the loan that they end up complying with all the conditions laid before them by the lender even if the conditions are not mandatory.
What can you do if you have been unjustly sold a PPI?
In case you think that you have been sold a policy without being informed about why you may need it in the first place, you may make a payment protection claim because thousands of people have managed to get their money back by proving that they ended up seeking coverage because of factors like:
- They were not explained why you need the coverage
- They were made to understand that it was included in the loan
- They were not really told how much it would actually cost
At any rate if you think that you have been cheated, you can get in touch with agents who help people to successfully make protection insurance claims. It does not even matter if you have repaid your debt. In fact if you have borrowed money from mainstream lending institutions in the last ten years, you may be eligible to claim back PPI.
Artice Source: http://www.articlesphere.com
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