PPI (Payment Protection Insurance) sounds like a sensible consideration when finalising your loan, mortgage or credit card deals. However, make sure this expensive cover is appropriate to your needs.

PPI, are you getting the deal thats right for you?

(mortgage deals)

Author: Andrew Tuthill

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PPI these days is pushed very strongly at people when taking out new loans, mortgages and other financial borrowing. However, this possibly extremely expensive insurance might not (medical insurance) be appropriate for your circumstances and you could be throwing away good money for no reason. (medical insurance)

For example, PPI plans can offer protection against unemployment. Completely ( unsecured loans ) useless if you are self employed or on short term contract employment. You would expect this to be taken into consideration when you are offered the PPI but banks and other lenders are not so fussed about telling you this.

You could also be covered already for all that a PPI offers you in the form of Life and Critical ( travel insurance ) Illness insurance or Mortgage Payment Protection plans etc. Make sure you know all of the facts before considering taking a PPI plan, it is not compulsory after all. (life insurance advisers)

Cover offered from PPI varies but will generally offer you cover from after the 1 st 30 days of unemployment and continue for up to 12 months or until you find new employment. This, however, can push your repayments skywards. For example, The Royal Bank of Scotland will push ( mortgages ) their APR to 22.7% when PPI is included. This would increase a 5 year loan of £10,000 to £16,100 instead of £11,650, an increase in line with most big banks similar schemes. Its not hard to see why this insurance is pushed so hard by profit hungry companies!

The fact that such profit is made from these plans and that banks and other lenders ( personal loans ) are not taking reasonable steps to translate the correct information when offering PPI has prompted the office of fair trading to investigate the marketing strategies used to sell them. In 2005, the Financial Service Authority were severely critical regarding possible mis-selling of PPI plans. Many companies just werent bothered about selling inappropriate policies

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Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it. Loans may be secured on your home or other property. Think carefully before securing other debts against your home.