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Payment Protection Cover Needed Insurance For Many

Apr 16, 2008
Payment protection cover is an extremely important insurance protection for many Brits. This insurance protection offers a short-term monthly income payout for people displaced from work due to involuntary redundancy, illness, accident, or unemployment. It is different than income protection insurance which offers longer term income payment protection. Payment protection insurance typically covers twelve to twenty-fourth month time periods. Payments vary depending on the premiums paid and benefits associated with the package. A typical monthly payment might be 1,000 pounds of tax-free income.

The major benefits provided by the payment protection include its provision of some monthly income to help Brits cover bills or mortgage payments. Other benefits vary depending on the terms and conditions of the payment protection cover product purchased by the customer. There are many banks and lenders that provide the insurance protection. Often, consumers benefit more from looking to independent providers that specialize in offering the protection.

The Office of Fair Trading (OFT) and the Financial Services Authority (FSA) have both been investigating business practices related to the payment protection cover industry in the last several months. It is expected that several major regulations and ethical adjustments will take place in the industry following the findings of the FSA investigation.

Research in the payment protection insurance (PPI) industry was started largely based on some questionable selling practices employed by some of the large banks and insurance providers that sell the products. One of the causes for concern was mis-selling techniques in which several providers were attempting to sell the insurance to unknowing consumers who would not be covered by the protection. For instance, the insurance does not protect part time employees, but some companies were selling the protection plans to part time employed people anyway.

Independent specialists have typically maintained a stronger reputation for protecting the interests of payment protection cover customers. Many of the larger banks that provide the insurance simply use it as a way to expand on the product portfolios of existing customers. Some mortgage lenders, for instance, questionably package the insurance into the costs of a customer's loan. They rarely mention that potential to obtain the insurance at significantly lower premiums from an independent company.

Insurance prospects need to carefully research providers and understand their insurance options before approaching a lender or a bank. Often, unwitting borrowers get trapped in a situation where they feel obligated to take the protection plan offered by a lender, not realizing they have options, and the right to look around. The FSA regulates the industry, and as a result of its current investigation, will likely tighten selling requirements in order to protect the interest of consumers.

Brits need to carefully consider their personal financial situations in exploring the benefits of payment protection cover. The benefits provided by independent specialists do not only include income payments with few exclusions, and excellent customer services. They also tend to come with a higher likelihood of honesty and integrity from the providers. These are important to insurance customers.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of payment protection cover.
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