Understanding Payment Protection Insurance

If you have heard of PPI (which you doubtless have) then it is unlikely that you would have heard anything good about it. If that sentence was somewhat presumptuous and you have not heard of PPI, or Payment Protection Insurance, (in its non attenuated form) then behold the precis: PPI is an insurance product that covers a person against the payment of any borrowing that the PPI is taken out alongside, should that person find themselves in a predicament whereby they are unable to work. Ostensibly, such policies cover people if they become sick, made redundant, or are involved in any sort of accident. You can take such policies out alongside all types of borrowing such as store cards, credit cards, personal loans, and mortgages.

The aforementioned explanation of PPI does nothing to suggest that there is anything wrong with PPI. As a concept, PPI certainly is a great thing. It is the banks that have turned it into a bad thing by virtue of the unscrupulous techniques that are employed within its selling. For instance, the consumer is lead to believe that they will be able to make a claim if they become ill. People are unaware that they will not be able to make a claim if they become unable to work because of having a bad back or because of suffering from stress. What with stress and bad backs being the main reason why people have to have time of work, it would appear that PPI has functions so that many people that need to make a claim cannot.

The banks are hell bent on charging exorbitant fees for PPI and this is one of the reasons that it is so expensive: the policies are overpriced from the word go. If this is then added to the fact that the standard policy of the banks is to sell the policies to customers in a single premium fashion, then the policies become furthermore exorbitant: so what is this single premium thing? Well single premium means that the banks add the whole cost of a PPI policy to the cost of a loan in its entirety. Therefore, the PPI policy becomes subject to interest for the whole duration of the borrowing. Add this to the fact that most policies are for a shorter time-span than most credit agreements, and it means that people end up paying for a PPI policy that is no longer active.

Wait a minute because that is not all. There is indeed a triumvirate of flaws when it comes to the manner in which the banks sell PPI. What the banks have made common practice is to get their call centre operatives to lie to the people during the application process for the loan. They get the call centre operatives to say that in order for the customer to be accepted for a loan, they have to take out a PPI policy with the bank. It is also common practice for people to be misinformed to the extent whereby loans are taken out inclusive of PPI, without customers' consent. Still, at least from May 2009 it will be illegal for banks to sell PPI to customers in a single premium capacity.

If you feel that you have been mis-sold PPI then there are options available to you. Plenty of companies out there will handle the reclamation of your PPI. There are some companies that will ask for a commission fee for doing so but there are others that offer such help at no charge. Therefore it is important to do your research if you are planning on getting a company to represent you. The main thing to remember though is that money has wrongly been taken from you: you deserve it back.

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