PPI – Payment Protection Insurance

If you've taken out a loan, got a mortgage, or have a credit card, chances are you've also got something called a Payment Protection Insurance policy (a PPI policy) attached to the agreement.

Also known as...

It might be called another name, such as Loan Payment Protection, Accident, Sickness and Unemployment Protection, Personal Loan Protection or Credit Repayment Protection, but it's still PPI.

What does PPI do?

In theory, a PPI policy sounds like a great idea. It promises peace of mind and reassurance that credit or mortgage payments will be covered during the term of the policy if your personal and financial circumstances change for the worse, such as in the case of unemployment, sickness or death.

Certainly, PPI is big business. With an estimated 20 million policies already in force and annual gross premiums in excess of £5 billion, lenders are keen that all policyholders have cover.

The Cost?

The cost can be high. Premiums for PPI policies can add anything from 20% or more to the total amount to be repaid on a loan agreement, making it even harder for borrowers to meet the monthly repayment. Premiums of between 13-56% of the total have been reported.

So why do borrowers end up with the policy? Some don't even realise it is part of the repayment until it turns up on the invoice. Many companies informing the clients that the policy is compulsory, refuse to authorise a loan without some form of PPI and some even include the premiums within the entire loan repayment figures.

PPI is an optional extra and cannot be included as a requirement of taking out a loan or credit card and you do have the right to say "no I don't want it".

Is PPI good for me?

Less than 20% of all PPI policies sold are ever claimed against and, even then, not all of these claims are successful.

When you take out a PPI policy there are certain circumstances under which you cannot make a claim. For instance, if you were unemployed, retired or even self-employed when you took out the policy, it is likely you are ineligible to make a claim under any circumstances.

Even when a claim is successful, many PPI policies do not actually pay off debts, but only cover payments for a limited period, and sometimes only the minimum payment.

So, were you mis-sold PPI?

Quite possibly, but you can take action. Our simple 60 second test will see if we can help you claim a refund of all your premiums – click the button now – it's free, without obligation and without risk, all claims are done on a no win, no fee basis.