Payment Protection Insurance (PPI) is one of the most important elements of consumer protection in the United Kingdom. It is a financial product which provides cover to a customer when their income has been affected by an unforeseen event such as ill health, a job loss, or the death of a dependant.
When the customer is unable to meet their debt commitment, PPI will pay out a proportion of the debt balance, to help ensure the customer does not have to face unnecessary debts or bankruptcy. PPI is designed to act as a financial safety net for customers, and it also enables lenders to reduce their risk of default.
It is important for customers to understand that although PPI can be a valuable form of protection, it is also incredibly expensive. Customers that purchase PPI need to be aware that the policy may not offer adequate financial protection. They should look at the terms of the policy carefully and make sure they understand what is covered and what isn’t, as well as any exclusions and the duration of the policy.
When buying a PPI policy, there are a number of important questions customers should ask and consider. These include:
• Is the offer suitable for my circumstances?
• Are the costs of the policy reasonable?
• What type of financial protection will the policy provide?
• Is the insurance company financially sound?
• Are the terms of the policy clear and easy to understand?
• Are the claims procedures easy to follow?
• What is the customer service like?
When customers purchase PPI they should also make sure they know their policy terms and conditions. This includes understanding any exemptions that may apply, as well as what type of cover is provided. Customers should also familiarise themselves with the payment protection insurance opt-out period, as this allows customers to cancel their policies within 30 days of purchase, without having to pay a penalty.
In order for customers to protect themselves and gain peace of mind when taking out Payment Protection Insurance, it is essential they seek independent financial advice and/or seek professional guidance from a payment protection insurance specialist. There are a range of sources of help and support available to help customers understand their payment protection insurance policies, including online forums, online advice services and financial advisors.
Finally, customers should make sure they are aware of the Financial Ombudsman service, which can be contacted if customers need further assistance. The Ombudsman can provide independent and impartial advice to ensure customers receive the best possible outcome from their Payment Protection Insurance claim.
