Tips on buying payment protection insurance

With the insurance industry regulators and watchdogs recently publishing damning evidence of sloppy sales practices existing in the payment protection insurance (PPI) industry, there are ways that you can ensure you are adequately protected without being ripped off.

Simon Burgess from specialist protection insurer BritishInsurance.com says that consumers can get wise to the PPI sales tactics employed by “greedy lenders”.

PPI is a way of ensuring that your loan or other credit commitments are still met should you be unable to work due to unemployment, sickness or accident.

However, many companies sell the product without seeing if the customer is actually eligible (eg the consumer may have an existing medical condition such as a bad back which would prevent them from claiming should that cause them in future to not be able to work; or they may be self-employed and would not be able to claim on the redundancy aspect).

Burgess urges customers to ensure that they fully understand the terms and conditions of the policy and to ask the adviser whether they would actually be eligible to claim.

Also, when taking out a loan, do check whether the cost actually has PPI cover already included in it. Many lenders automatically add the premium to the loan repayment cost, bumping up the cost dramatically and leading many consumers to believe that they will not get accepted for the loan unless they take the PPI.

Finally, shop around. Premiums vary considerably from provider to provider, with the cheapest starting at only £2.50 per £100 of monthly benefit and the most expensive policies costing over £20 for the same level of cover.