All About Payment Protection Insurance

Have you heard about payment protection insurance? Perhaps you may not be aware of it but there is a fair chance that you have encountered it especially if you are fond of making loans or applying for credit cards.  This is a special type of insurance that is offered by the credit company to their loaners as a form of securing the payments and make sure that whatever happens, their debtors can still pay for the loans that they make. Basically, payment protection insurance of PPI is an optional insurance that will help loaners pay for their debts if ever they lose their job due to factors like physical disability, retrenchment, or illness.

What are the benefits of PPI?

If you come to think of it, PPI is indeed an insurance that will really come in handy when faced with a difficult financial situation such as the loss of regular income. At least, paying for your loans will be one less burden to shoulder if you get laid off from work. It can help keep your credit status or reputation clean so you can still apply for loans in the future. At the same time, having PPI can also help save you from possible lawsuits if you fail to pay for your loans.

Where to get PPI?

As already mentioned, payment protection insurance is usually offered by the lending companies themselves as they want to make sure that payments are well protected. If you make a loan, check the documents that the lending company may ask you to sign as one of them may be PPI. However, there are also independent insurance companies that can provide you with payment protection insurance. If you are interested in getting one and do not like the one offered by the lending company, then you can perhaps look for an independent company to cater to your payment protection needs.

Is there a bad side to PPI?

Despite being very helpful for individuals, payment protection insurance has been having too much negative feedback recently.  This is partly because a lot of insurance that have been sold to policy holders are said to have too many loop holes. It means that people who wish to avail of the insurance cannot easily do so as the provisions are just too limiting. In the end, policy holders are not able to utilize the insurance that they paid for.

A lot of this misinformation may be caused by the lending companies themselves. Most of them do not take the liberty to explain to their clients all the necessary provisions included in payment protection insurance. Policy holders claim that though they were given the basics of the policy, they were not given the chance to carefully review the provisions which is why they do not have a fairly good idea on what the policy is all about.

In worst cases, a lot of policy holders claim that they were not told that payment protection insurance is only optional. Some were not even aware that they were given the insurance and that they have been paying for it for a long time and may be entitled to claim back ppi.

What to do when mis-sold with PPI?

Because of the big fuss that mis sold ppi has created, many insurance policy holders have been filing for claims. However, the processing of claims usually takes too long. Sometimes, the claimants were not even provided with a fair and honest refund. Good thing that nowadays, there are many companies who offer their service in favor of the claimants. They are known as insurance solicitors who may stand as a representative of the policy holders to ensure that they present their claims conveniently and at the same time get a fair compensation that they deserve.

How to Reclaim Mis Sold PPI

The first step in claiming a mis sold PPI is to inform the lender that  you were missold a PPI policy. There are numerous cases of missold PPI so it should not be very difficult to seek help. However, the complainant has to be as specific and straightforward as possible. It is important that the client is aware of the basis of the complaint. There are several possible signs of determining whether a person was missold a PPI coverage:

• Payment protection insurance was sold at the time that the person was not fully employed.
• The policy holder was told by the lender that PPI was a compulsory purchase along with the loan or credit card.
• The lender told the policy holder that the PPI could only be bought from one company.
• The policy was sold to the client without his or her full knowledge.
• The lender failed to completely explain all the details to the client.

It may seem highly improbable that reputable banks and lenders will employ poor selling tactics in promoting PPI but even premium banks are guilty of such offense. This should give the victim of such fraud a stronger reason to pursue a missold claim carefully and properly. The rapid increase of PPI-related complaints has prepared banks and lenders in handling these cases toward their advantage. A poorly-prepared claim will end up in the dumps.

The client must take action immediately on a missold payment protection insurance since the chances of getting a refund decreases with time. For instance, there is a British act  called the Limitations Act of 1980 which says that refunds should be made within six years of taking out the PPI or three years of awareness of the problem. There is also a law that allows lenders to keep PPI-related documents for only six years. If the client kept the documents, he or she has an advantage. Laws vary from country to country but nonetheless, victims of the PPI fraud have to act on poorly sold policies.

If the client intends to claim back a missold payment protection insurance, then rejection will most likely come along the way. Banks and lenders are well-versed in the complicated paperwork, compared to the vulnerable policy holder. There are many cases of rejection, mainly because the complainant stumbled with technicalities along the way. This should not disillusion the complainant in any way, as long as there is a valid reason for the complaint. Some lenders will not go an extra mile to check if their clients are eligible for PPI policies but will be only too happy to take away their money. It is crucial to stand firm at this point.

Seeking help from government financial services or a PPI reclaims company will speed up the process and increase the chances of claiming back a payment protection insurance refund. Government services are increasingly become wary of shady lenders who missell PPI policies and have sent out watchdogs to monitor these unfair activities. They also encourage victims of PPI frauds to seek a claims company to aid them in getting a refund. Consulting a claims company is a wise option because the multitude of paperwork may be too technical for a client. A third-party claims company – preferably one with a no win, no fee policy – will help the PPI victim claim back the policy in the shortest time possible. A claims company can even ease the process for those who have lost their PPI-related documents. An effective claims company will not charge any upfront fees and will only charge if the claim is successful.

Lenders should never get away with missold payment protection insurance. Victims should not stay victims for long and should stand up for their rights.

Mis Sold PPI Claims Explained

Payment Protection Insurance is listed as one of the United Kingdom’s top financial concerns. In 2010, it topped the list of the most useless financial products in the UK. But is PPI really that bad? Well, PPI is a policy that protects you from further repayment of loans, mortgages, and credit card bills in case you get seriously ill, lose your job, or die. What is so bad about that? Nothing, really, except if you never know you were sold PPI! In the UK, millions of people are allegedly mis sold PPI by banks, financial institutions, and brokers. The only reason why PPI made it to the list of most useless financial products in the UK is because most of the policyholders of PPI do not NEED it.

How did it start?

The PPI scandal began a few years ago, which is the period when the Great Recession started. Consumer groups discovered that banks have been selling PPI by the millions by attaching it to the loans and mortgages that people were taking out at the time. People were not made aware that they were being sold PPI, or that PPI was not in any way connected to the loans, mortgages, and credit cards they were taking out. According to consumers, they were told that PPI was compulsory and that they cannot take out a loan unless they have a PPI policy. Most people obliged to this arrangement. After all, what do they know about financial laws? According to the Consumer Protection Code, no two financial products shall be sold as a single package; they must be quoted separately to avoid confusion and abuse.

As more and more people realised that PPI was not supposed to be compulsory before they could take out loans, and that PPI could be bought elsewhere, anger brewed and reached the Internet. Consumer groups formed alliances online in 2008 and urged Britons to claim back ppi. In 2007, there were less than 700 complaints about PPI in the Financial Ombudsman Service or FOS. In 2008, this grew to 5000.

Feeling the Weight

The FOS is the body that mediates individual financial disputes between consumers and banks. It is already under intense pressure because of the sudden rise in the PPI complaints. Despite the fact that it has increased the manpower dedicated to handle PPI concerns, a lot of people are still frustrated at how slow their cases are being processed at the FOS. Many people have been on the wait list for more than one year, and some cant help but look for other options. Claims companies are also helping people make PPI claims, and they are increasingly popular for PPI claims.

PPI Claims Companies a Good Alternative

Instead of going to the banks who sold them PPI, or the FOS which is clogged with complaints, people are approaching claims companies, who help PPI policyholders make a refund provided they are eligible for a claim. PPI claims companies will take on peoples cases on what is known as a no win on fee basis. Once proven that PPI is mis-sold by the bank, the policyholder is awarded the refund, 25% of which is shared with the claims company. Claims companies do not usually charge upfront fees, but will take a share of the ppi refunds if the case is awarded to the policyholder.

What you must know about PPI

Payment protection insurance is a type of insurance that can be used to settle your outstanding debts, obligations, or overdraft temporarily. It is put to use when a policyholder is rendered unable to pay his current debts such as credit card arrears, car & bank loans, and overdrafts. If you want to know more, then read on to find out how to acquire payment protection insurance and the recent problems that policyholders have encountered with it.

Acquired from credit companies and banks, payment protection insurance is paid via premiums and interest rates. Premiums can be paid off either in monthly increments or upfront. The price of the premiums and interest rates depend on a number of factors namely: job stability and risk of termination, amount of loan, term of employment, age, economy and health. These prices can be changed even after parties have already agreed to a price. The prices are adjusted due to changes in the aforementioned factors.

Similar to many other types of insurance, a payment protection policy has eligibility and exclusionary clauses that prevent an individual from making an insurance claim. When you apply for a payment protection insurance you must not be retired, self-employed or unemployed, and you must not be suffering from an existing medical condition. Aside from these, there are also situations that might disqualify you from making an insurance claim when you’re already a policyholder. If you are rendered unable to work within the first 60 days of the policy, an insurance claim cannot be made. The same goes for being rendered ill from a medical condition that: you knew about whether medically diagnosed or not; persist within the first 12 months of the policy; is related to stress or back problems. Also, if you are rendered unable to work due to pregnancy, an insurance claim cannot be made unless there are medical complications that accompany your pregnancy.

The problems that most policyholders encounter with payment protection insurance is that the prices of the premiums and interest rates have been altered without their insurance provider and/or company communicating the same to them. Whenever a term or provision of a contract is amended, a party who is making the amendments must communicate the same to the other party in order to reach an agreement. Credit companies have intentionally done so to their policyholders and many have claimed damages.

Another problem that some have encountered is that the eligibility and exclusionary clauses were not fully explained or were even mentioned to them when they applied for the contract. Some policyholders found out that they were not even qualified when they applied for payment protection. Also, there are some who had their insurance claims rejected due to exclusionary clauses that were contrary to law and legal conduct. This is actually the reason why many have been making damage claims against their credit companies and banks that they acquired their payment protection insurance policy.

There are many other problems involving ppi, most of these involving its sale. 90% of adults in the United Kingdom have payment protection insurance in some form or another and 40% of those policyholders do not even know that they have one. This is so because many credit companies and banks failed to tell their customers that a payment protection insurance policy was included in a credit product that they have purchased. Other credit companies cloaked their ppi under the guise of a different name. The sad thing about this is, payment protection should have been a valuable asset for one to have in theory. However, the malpractices employed by credit companies have forever tainted its name.

Payment Protection Insurance – does it protect you?

The concept insurance in general, and of  payment protection insurance in particular, has always stirred a lot of sentiments from different market forces, may it be consumer groups, government agencies, and industry watchdogs. This is because payment protection insurance companies have the lowest level of approval rating  from its own consumer base. For starters, this insurance policy positions itself as the vanguard of debtors who are in the middle of outstanding loans, mortgages, and credit purchase transactions in the country. To give you a concrete picture of what happens in the process of purchasing it, this type of policy ensures that in the event that the debtor consistently fails to pay the debt he put himself in, the insurance company will take care of the payment in full or in part, for a certain period in time.

While it is enticing to think that a debtor does not have to worry about being laid off from work, being involved in an accident, as well as getting a disability that renders him or her ncapable of working under regular circumstances, the practice of companies is far from the front that they have shown their customer base. As a matter of fact, and little do people know about it, that payment protection insurance policies are already an automatic requisite for people who want to purchase a loan to begin with. Yes, these policies are sold to people even without their full consent to it, especially if the lending institution requires the purchase of PPI before the loan is even approved. When this happens, the debtor is put in a very compromising situation; on the one hand, getting the loan may be the answer to the financial problems he or she is experiencing, while on the other hand, purchasing the policy can mean increasing the amount that you have to pay for the loan. If you actually look at the original amount, it would be significantly lower if you remove the amount that the policy adds which can range from eleven to fifty four percent of the original amount. This is what makes the practice really dubious for some, because more people are stuck in a sea of debt just to pay for the interest rates of the policy . See,when you purchase it, you have to pay for an upfront premium. In reality, what you pay for are the interest rates that are actually pegged on the amount of loan.

Furthermore, payment protection insurance companies are under fire for the practice of selling the policy. Given the crucial part that they play in the lives of people who are in deep need, you would expect that they are socially responsible and will enable the depressed and indebted individuals to make fully rational and well informed choices. But, sadly enough, payment protection insurance companies have been accused of misinforming their clients to entice them to purchase their product. Furthermore, there have been listed cases wherein the company prints the particularities of the policy in small fonts that make it impossibly hard for consumer to check the contract thoroughly. This leads to consumers claims being rejected – sometimes arbitrarily – by the company, because of the presence of a lot of unchecked exclusionary clauses that specify pre-existing conditions where the company is not supposed to be liable for whatever happens in the lives of its policy holders. In the end, there is a general consensus that the practice of these companies needs to be regulated, and a government intrusion is necessary for reforms to happen. Until then, consumers will just have to bear with the difficulties of payment protection insurance.