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Payment Protection Covers Illness, Accidents And More

Apr 16, 2008
For many Brits, payment protection insurance (PPI) can make the difference between being able to put food on the table, meet bills, and pay monthly mortgages, in the midst of a significant illness, accident, involuntary redundancy, or other forced unemployment. This short-term insurance protection typically provides monthly income payments, which vary based on plans and premiums, over the course of 12 to 24 months. Payment amounts range from several hundred pounds to a few thousand pounds per month.

Independent insurance providers are an often overlooked, low cost resource for customers looking for payment protection. Most of the time, this is because customers do not take the time needed to adequately research product and provider options and benefits. Payment cover is not a protection commonly considered as a standard component of an insurance portfolio by many customers. In fact, many Brits struggle to meet their monthly needs when illness or accidents occur, as they rely on the State to support their needs, which is not the best move.

Large banks and lenders are other common sellers of payment protection. These larger sellers often include the payment plans with other finance or loan portfolios in order to expand the amount of business they get from customers. While there certainly are honest and credible large companies that sell the insurance, the payment cover industry has come under scrutiny due to the questionable practice of several sellers.

From a fairness standpoint, many sellers have failed to inform customers of their options. Some lenders package the insurance as part of their lending costs, or present the coverage in a way that puts manipulative pressure on the buyer. The Competition Commission is currently engaged in an industry investigation in order to clarify regulations to more thoroughly protect customers. An announcement regarding their findings is expected out during 2009.

This is why independent providers of the insurance are often a better option. Companies that operate under the umbrella of the industry are more heavily regulated, generally have significantly lower premium rates, and usually are stronger advocates for the interests of consumers.

Prospects must be aware that the payment cover is intended for full time employees and is short-term income protection insurance. Some large sellers have unethically offered and sold the product to part time employees and retired people, who are not covered under the terms of the protection. Consumers need to be knowledgeable when buying certain financial services and loan products. Consumers sometimes get caught in situations where they agree to buy higher rate protection because they feel an obligation, or a lack of options.

Payment protection insurance is an extremely important protection for many Brits. Careful and thoughtful planning is crucial, however, with this particular type of insurance. Many companies discretely package unfavourable terms and conditions, which can adversely affect the potential for payout, and the amount of the payouts, into the fine print of their products. This is why it is vital that customers look to independent specialists for impartial advice, and ask the appropriate questions.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of payment protection.
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