When unexpected circumstances occur, many often find themselves unable to fend for themselves in the world of unpaid debts such as credit card bills, loans for possessions such as cars and even mortgage payments. If you’re living within the United Kingdom, you have the option of taking out something called payment protection insurance.
Payment protection insurance is just as it’s implied–it helps an individual cover monthly payments that they can’t cover due to a number of circumstances. Payment protection insurance plans cover those who lose their job due to sudden and unforeseen reasons, suffer from an illness or sudden accident and even death. If you’re unable to earn a consistent income due to any of these factors, a payment protection insurance plan may be for you.
Due to the idealistic nature of payment protection plans, many have chosen this particular plan to ease their times of financial stress. This ease, however, has allowed many residents of the United Kingdom to be mis-sold payment protection plans. Thanks to this, it makes them eligible for a PPI claim.
During the past decade, various forms of payment protection insurance policies were sold to consumers who either weren’t suited to their insurance plan. This also included the contingent of consumers who weren’t even properly informed about the mechanics and precautions of an insurance plan.
Payment protection insurance policies have a high number of rejected PPI claims, since the insurance itself isn’t underwritten during the sales process. At this stage, the average consumer may be taken advantage of, since they don’t consider whether they’re eligible for an insurance policy or not. In fact, most aren’t even aware that they even have the policy when they take out insurance.
Banks and institutions intentionally misled consumers into taking out their loans coupled with payment protection insurance policies without telling them about the nature or even cost of their insurance plan. Payment protection insurance policies, in addition to their corresponding loans, were encouraged by financial institutions thanks to their high commission rate, which made them more money than interest on a typical consumer’s original loan.
Payment protection insurance is typically offered by credit institutions and banks within the United Kingdom as a peripheral part to an overdraft product or loan. This type of insurance plan covers monthly financial repayments over a period of 12 to 24 month, depending on the plan. After that particular period ends, the plan holder will have to continue repaying their financial obligations.