Main » 2009 » January » 9 » Make Sure Payment Protection Insurance Is Right For You Before You Buy
Make Sure Payment Protection Insurance Is Right For You Before You Buy
by Simon Burgess
While payment protection insurance can be a valuable asset if you
have loan or credit card repayments to make each month, it is not
suitable for everyone. Some individuals would not benefit from taking
out the cover because of the exclusions found in a policy.
majority of payment protection policies have exclusions. Being in
part-time employment, suffering from a pre-existing illness, or being
retired or self-employed could all mean cover is not suitable.
Providers can also add in other exclusions to the small print and
reading the key facts of a policy is a necessity. If you shop with a
specialist provider for your cover then the provider should give you
all the facts you need to know before you buy. This means you can
ensure that the product is right for your circumstances.
payment protection plan pays out a tax-free sum of money each month
after you have been out of work for a set period of time. The start
date for payment varies from provider to provider but is normally
within 30 to 90 days of being unable to attend your job. This could
be due to suffering an accident, being ill or finding yourself
unemployed through no fault of your own. Redundancy, for example, is
one reason you could claim.
Once the policy holder has
started to receive an income then they continue to do so for between
12 and 24 months, again depending on the provider. This means they
have to worry less about being able to afford financial commitments
or credit card or loan repayments.
When taking out a loan
from the high street lender payment protection is usually offered at
the time of borrowing. In the majority of cases this is not the ideal
way to buy protection. High street lenders are known to charge high
premiums for the luxury of having peace of mind. Even worse, in some
cases they ‘push’ cover alongside the borrowing to those who
would not be eligible for a pay-out should they make a claim.
an investigation by the Office of Fair Trading revealed that
mis-selling of payment protection products was rife among high street
lenders, people lost faith in the product. The Office of Fair Trading
highlighted the fact that lenders were not making it clear that
people could shop around for a policy. Some lenders were misleading
the consumer into believing that the application for the loan
depended on them taking out a policy. At the same time, the lenders
often give out very little information, which made understanding and
comparing cover almost impossible.
insurance taken with a standalone specialist provider removes the
confusion associated with a policy. Providers do this by giving the
facts in plain English. A specialist will also provide a quality
product that can save you as much as 80% in comparison to the
high-end quotes offered by some high street lenders. It is essential
when comparing protection that you also compare the key facts because
this is where you will find vital information regarding the cover you
are taking out.