Payment protection insurance (PPI) is an insurance policy that helps guarantee that you’ll be able to repay your debt obligations should your source of income dry up. In other words, it’s an insurance policy that protects you against not being able to pay. That’ll help ensure you don’t lose your mortgage (or car) or damage your credit report should you lose your job or be unable to work due to illness.
While millions of people have payment protection insurance, most people are surprisingly uninformed about their policies. Here are some of the most important things you need to know about your payment protection insurance.
#1: Payment Protection Insurance is Very Expensive
Most people don’t realize just how expensive payment protection is. Payment protection generally costs about 25% of the loan amount. Yes, that means if you’re paying £800 pounds a month, a full quarter of that amount is going toward the insurance premium.
If you don’t believe you’re in danger of losing employment or getting sick, that’s a lot of money to be paying to a third party.
#2: A Lot of PPI Policies Are Mis-Sold
Because of this extremely high premium, loan officers are under a lot of pressure to sell a lot of loan insurance.
As a result, PPI is often mis-sold. That means that you were sold a PPI policy when you shouldn’t have, or you were sold one through misinformation.
Often time’s that means loan officers may have told you it was mandatory to buy PPI when it really wasn’t. Or you may have been sold a policy that you couldn’t actually use should something happen.
Whatever the case may be, there’s a good chance (about a 10% chance) that you were mis-sold PPI.
#3: You Can Purchase Incident-Specific PPI
If you’re only worried about one specific kind of accident or injury, you can purchase PPI that covers only that issue.
For example, if you’re worried about getting in an accident, you can purchase credit accident insurance that’ll cover you in the case of an accident. Getting this type of incident-specific insurance is much less expensive than buying a “cover all” payment protection insurance policy.
Your loan officer may or may not have told you about this option. There are many different kinds of PPI policies you can choose from that cover or don’t cover all kinds of things. Also, if you’re worried about a specific kind of injury that isn’t covered under the standard PPI agreement, often time’s you can get it added in for an additional charge.
#4: You May Qualify for Reimbursement
If you believe you were mis-sold PPI, you may qualify to get reimbursed. What does that mean?
First, it means you file a claim with the company that first sold you the PPI policy. You detail why you believe you can claim your PPI payments. If the company doesn’t rule in your favor, you can then file the same claim with the ombudsman and see if they’re willing to overturn that ruling.
If the ruling is indeed in your favor, you’ll be able to get all the money you paid to the company returned. And since the company essentially “borrowed” your money, you’ll even get paid interest on the cash!
#5: You Can Learn Your Options for Free
There are a couple of different ways you can file a claim against your PPI providers.
First, you can do it all yourself. If you have a propensity for research and have the time to go through the process, this is definitely a viable route.
A lot of people find that doing it themselves is more tiresome than they’d hope. Or they might be intimidated by the process of going up against a major financial institution. Whatever the case, if you’re unsure of your ability to do it yourself, you can talk to a claims company who can handle all the work for you.
These claims company take a small chunk of whatever money you get reimbursed. It’s free to talk to them however to explore your options and see whether or not you qualify for getting your PPI insurance money back.
A whopping 2 million UK citizens have already gotten their money back for PPI. If you believe you’ve been mis-sold PPI, now’s the time to step up.