Choosing the right PPI scheme

With many customers being mis-sold Payment Protection Insurance, make sure you select the right one for you

11:45 12 November 2012

How do you get Payment Protection Insurance (PPI)? That is the question on many people’s lips when they are looking to put a plan in place that can help them deal with their debt.

 

Well, a PPI scheme is generally offered to a customer by a bank or any other company. This is done when a customer approaches the said bodies with regards to taking out a loan.

 

In most cases a bank or company will lend a customer money and Payment Protection Insurance can come alongside this. So, if you were to take out a loan in the form of an overdraft, for example, the lender i.e. the bank in this case, will offer overdraft payment protection insurance as well.

 

PPI can be taken out separately to a loan however, by a customer going to an insurance company.

 

Although, this would involve independent research to ensure a person gets the right level of cover to suits their needs. This would mean an individual would be responsible for checking the company came up with a plan with the best benefits if a PPI claim was to be filed.

 

According to some reports, Payment Protection Insurance plans can only be available for one to two years, and post this, the borrower then becomes fully responsible for the repayments on a loan.

 

This means there will be no help given to the loan owner if for any reason they are unable to make their repayments. PPI works by issuing a payment to the bank or company who provided a loan if a borrower falls ill, has an accident or succumbs to an event that may result in their death, and they are unable to afford the debt.

 

There are different schemes for PPI. In some instances, a full loan can be paid off on behalf of a borrower in the event of their death. PPI schemes are also known under a lot of other names such as Accident, Sickness and Unemployment Insurance and Loan Repayment Insurance. PPI can also be referred to as Credit Protection Insurance.

 

Individuals are advised to examine a Payment Protection Insurance closely before agreeing to sign up to one.