Problems with Payment Protection Insurance
Article published on 26th July 2008
All good so far, but often Payment Protection Insurance policies are over-priced and pushed for sales by many advisors when they aren't needed.
Most companies that offer anything to us on credit or offer to lend us money (like a mortgage) will offer some sort of PPI policy alongside the main product they are selling us. Whereas this might seem like a good idea it in fact denies us the opportunity to look around for other PPI policies that offer the same but for smaller premiums. The net result of this is that the PPI policies that we often buy alongside our mortgages or credit cards are much more expensive than they need to be for the amount of cover that they offer us.
Indeed, some high street lenders have been targeted for criticism that they are charging far more for their PPI policies than many of the independent Payment Protection Insurance brokers offer and so are not fair or competitive - especially when they tend to be sold as some sort of 'natural' add on to the money being borrowed.
Without doubt Payment Protection Insurance policies are complicated and often full of exclusions. Even if you read through all the small print it can often be difficult to unravel exactly what is meant in every context, which has in the past lead to leads claims being rejected.
In the Payment Protection Insurance report released by the Office of Fair Trading, it was revealed that for every £1 taken in premiums to pay for PPI, only 19p is paid back to customers in claims.
Always g to independent advisors if you want to purchase a PPI and be sure to get a comparison of the different policies available on the market. It is rarely, if ever, a good idea to accept the one PPI policy that your mortgage lender happens to offer simply because you believe it will be simpler than shopping around. Don't lose your hard earned money for nothing!
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