PPI is Good for Some But Not All

Payment protection insurance is commonly referred to as PPI. It is a type of insurance that is sold with mortgages, auto loans and credit cards. It may also be sold with store credit cards and as part of a hire purchase agreement. The purpose of PPI is to protect the borrower if he is unable to make monthly payments due to accident, illness, or involuntary unemployment. If all goes smoothly, a policy holder files PPI claims against the policy and receives moneys to assist with monthly payments.

For many people, PPI is valuable and a good idea. However, it is not suitable for everyone, including people with pre-existing medical conditions or those who are self-employed. Unfortunately, many lenders sold payment protection insurance as if it was a one size fits all solution. The result has been many customers being left with policies that they didn’t need or couldn’t use. In some cases, PPI was added to loans without the customer’s knowledge. Check your credit agreements to determine if PPI coverage is part of your loan.

If you have PPI, it is important to understand exactly what the cost is to you as well as to find out what it covers. This knowledge will help you determine if you need to or want to continue the coverage.