Ppi And Life Insurance: Are You Covered?

Payment protection insurance (PPI) is a form of income protection that covers monthly debt repayments on loans, mortgages, and credit cards if the policyholder is unable to work due to sickness, accident, or involuntary unemployment. It is not to be confused with life insurance, which is a legally binding contract that promises a death benefit to the policy owner when the insured person dies. While PPI can provide financial support in the event of unforeseen circumstances, it does not offer the same level of protection as life insurance, which ensures that beneficiaries receive a sum of money upon the policyholder's death.

PPI covers monthly debt repayments on loans, mortgages and credit cards

Payment protection insurance (PPI) is a form of income protection that covers your monthly debt repayments on loans, mortgages, and credit cards if you are unable to work. This could be due to illness, accident, death, or involuntary unemployment. PPI policies are designed to cover a single debt and are usually short-term.

PPI will pay out a sum of money to help you cover your monthly repayments. For loans or mortgages, the benefit amount may be the entire monthly payment, but for credit cards, it is typically the minimum monthly payment. After the end of the period, which is typically 12 months, the borrower must find other means to repay the debt. PPI usually covers payments for a finite period, and some policies repay the debt in full if the policyholder is unable to return to work or is diagnosed with a critical illness.

PPI is not the same as income protection insurance, which covers a proportion of your income rather than specific repayments. Income protection insurance is medically underwritten, meaning you go through full medical underwriting with your insurer, disclosing your personal and family health history. PPI, on the other hand, was not medically underwritten, making it very easy to take out but difficult to claim on. Income protection insurance can also be purchased on an 'own occupation' basis, meaning it will pay out if you are unable to do your own job, whereas PPI could only be purchased on a 'suited occupation' or 'any occupation' basis.

PPI has gained a bad reputation due to the mis-selling scandal, where it was sold to customers without their knowledge or as part of a bundle with loans or credit cards. However, it can be a useful form of income protection if you are unable to work and don't have savings or cover from another product. When considering PPI, it is important to remember that it only covers one debt, will not cover you immediately due to the deferred period, and may exclude certain illnesses and pre-existing conditions.

PPI covers repayments if you're out of work due to illness, accident or involuntary unemployment

Payment Protection Insurance (PPI) is a form of income protection that covers monthly loan or debt repayments if you’re unable to work due to sickness, an accident, or involuntary unemployment. It is also known as credit insurance, credit protection insurance, or loan repayment insurance.

PPI covers repayments if you're out of work due to illness, accident, or involuntary unemployment. It is designed to protect you during temporary setbacks and is often known as short-term income protection insurance. PPI policies usually cover payments for a finite period, typically up to 12 months, and provide payouts of up to 70% of your annual income.

The conditions for PPI policies differ, and it's important to note that it only covers one debt, such as credit card, mortgage, or loan repayments. It also doesn't cover pre-existing conditions, and there may be a deferred period before the policy kicks in.

PPI can be a useful form of income protection, especially if you don't have savings or cover from another product. However, it has gained a bad reputation due to the mis-selling scandal, where financial institutions sold PPI to customers without their knowledge or consent.

If you're considering PPI, it's essential to find a policy that suits your needs and avoid policies bundled with loans, as they may not offer the best deal.

PPI is not the same as income protection insurance

Payment protection insurance (PPI) and income protection insurance are two different types of insurance products. PPI is a form of income protection that covers monthly loan or debt repayments if you are unable to work due to sickness, an accident, or involuntary unemployment. It is connected to your outgoings, not your income. It does not cover a proportion of your income but is linked to specific repayments, such as a personal loan, car finance, or mortgage.

On the other hand, income protection insurance is connected to your income, not your outgoings. It covers a percentage of your income, usually between 50% and 70%, and you can use the money to cover essential monthly expenses like rent, mortgage, bills, and food. It is medically underwritten at the point of sale, which means that you have to go through full medical underwriting with your insurer. This includes disclosing your personal and family health history so that the insurer can assess the risk of insuring you. Income protection insurance can also be purchased on an 'own occupation' basis, meaning it will pay out if you are unable to do your own job, not just any job.

Another key difference is that income protection insurance can be taken out on a full-term or long-term basis, offering comprehensive cover until you are well enough to return to work or until retirement, death, or the end of your policy. In contrast, PPI can only be taken out on a short-term basis, usually covering repayments for up to 12 months.

In summary, while both PPI and income protection insurance provide financial support during difficult times, they differ in their scope, coverage, and duration. PPI covers specific debt repayments, while income protection insurance covers a percentage of your income. Income protection insurance also involves medical underwriting and can be purchased on an 'own occupation' basis, providing more comprehensive and flexible protection.

PPI is unlikely to be useful if you have savings or cover from another product

Payment Protection Insurance (PPI) is a form of income protection that covers monthly loan or debt repayments if you're unable to work due to sickness, an accident, or involuntary unemployment. It is important to note that PPI only covers one debt, such as credit card, mortgage, or loan repayments.

PPI may not be useful if you have savings or cover from another product, such as critical illness cover or loan protection insurance. If you have enough savings, you might not need PPI. It is recommended to look at different types of income protection to determine what is right for your specific circumstances.

Additionally, it is worth noting that PPI has had a bad reputation due to the mis-selling scandal, where financial institutions mis-sold payment protection policies to customers for years. As a result, if you are considering PPI, it is essential to find a policy that suits your needs and avoid policies bundled with loans, as they may not always offer the best deal.

PPI was widely mis-sold and the deadline for complaints was 29 August 2019

Payment Protection Insurance (PPI) was widely mis-sold, and the deadline for lodging complaints was 29 August 2019.

PPI was sold alongside mortgages, credit cards, and other unsecured loans since the 1990s. It was supposed to cover payments on these loans if customers fell ill, had an accident, became disabled, lost their jobs, or died. However, it was often mis-sold to customers who didn't need it or were unaware they had it. In some cases, customers were pressured into taking out PPI policies, being told they wouldn't get a loan or credit card without it. Many policies were poor value, with sellers taking unfair amounts of commission.

The mis-selling of PPI was carried out by banks, providers, and third-party brokers. Several high-profile companies were fined by the Financial Conduct Authority (FCA) for their role in the scandal, including Clydesdale Bank, Alliance and Leicester, Capital One, HSBC Finance, and Egg.

The FCA introduced rules to help customers get fair treatment if they complained about being mis-sold PPI and set a deadline of 29 August 2019 for making complaints. This deadline was to allow banks to draw a line under the scandal, which had been ongoing for years. By April 2021, over £38.3 billion had been paid in refunds to customers.

While the deadline for complaining to a business about PPI has passed, there are still some circumstances in which a complaint can be made. For example, if the PPI policy was sold after 29 August 2017 or if the complaint is about a claim being rejected by an insurer. Exceptional circumstances, such as a period of serious illness, may also be considered as a reason for missing the deadline.

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